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| | I must admit- I LOVE working with buyers. I do extensive advertising on the internet to capture leads and educate them on the home buying process and then search for properties that meet their needs, take them out looking at homes with the ultimate goal of getting them the best house at the best price and least hassle and handing them their keys after a successful close of escrow.Problem is that a lot of buyers like to remain incognito-They give cryptic email addresses so you can't even 'guess' at the first or last name to send an email in answer to their question. If they do leave a phone number; most won't answer and won't respond to messages left. Are we REALLY THAT scary to talk to?? I have to admit- I just don't get it. I have a system where I pre-qualify my leads before I spend my time (hundreds of dollars per hour) and my gas and wear and tear on my car before I will schedule a meet with a prospect,and because of the type of leads I get,it is usually at a showing. I am amazed at how many people are uninformed on how a buyer agent works; so for education purposes. A Buyer's Agent: Is not out to get your personal information and then stalk you until you purchase a home. They do not (in most cases) cost a buyer one red cent for their expertise in assisting the buyer in their home purchase. and here's a BIG NEWS FLASH! A buyers agent does not get paid to take you around looking at properties that: A. You are not qualified or pre-approved to buy B. That you are just "curious" about seeing "what's out there" or C. That you are going to then have your mom, best-friend, aunt's sister's cousin or any other most likely unqualified, LAZY, licensed agent ultimately write your offer for you after we have spent hours doing searches and 100's of miles driving you around to look. Okay- we'll some agents are so desperate that they WILL do this; and then kick themselves for trusting you and thinking that you 'liked' them enough to use them when it finally came time. Also- If you were a homeowner what would you think of a buyer's agent who called you to show your house to someone that was totally unqualified to purchase it? Do you think it's fair to have a homeowner run around and get their house ready to show; run a quick vacuum, go through room by room making sure all is 'show ready' and then take the dogs, kids and whatever and disappear for a couple hours so some looky loo can check out the house?? For our listings we guarantee our sellers that we will Never show their home to someone that is not qualified to purchase it- wouldn't you want the same courtesy? AND - remember what I told you about it not costing you ONE RED CENT for a buyer agent to represent you? The SELLER pays a total commission to the listing agent; who then pays a portion of that money to the buyer agent who brings a ready, willing and able buyer with a good solid offer. So, not only is the Seller counting on us to pre-qualify buyers before showing a property, but so is the listing agent. It is professional courtesy as well as being a "professional" ourselves in our job to do our job the right way. We at Stage Presence Homes want a buyer's commitment; don't get me wrong- If you don't click with us and feel we aren't doing a great job for you then you can fire us, but we are not going to spend our time and expertise working for someone who is not committed to us. We will help you figure out what you will need to do to become a homeowner; from how much cash needed, to monthly payments, and recommendations on where to go to get a loan approval. We help you establish what you can afford, what you need to do to get qualified and work with you and your loan person for however long it takes to get you there- 3 months, 6 months, a year; we are here to make you a homeowner (and along the way we will give you advice and information about real estate and the market because you are now OUR CLIENT and not just a prospect -or suspect LOL). If you just want to be set up to search our MLS like an agent and not be bothered until YOU feel like it- we have NO PROBLEM with that- we have LOTS of prospects like you. You look, ask questions through the system, we answer, and when and if you are good and ready to move the relationship along; we are ready. We will search MLS listings, expireds and withdrawns, For Sale by Owner and we even have investors that give us "First dibs" on their properties for our buyers BEFORE they go on the market. So if you are looking for someone that will WORK FOR YOU toward the purchase of your next home we will sign a VIP Buyer Agreement that spells out everything we do for you; including some special bonuses. And you, in turn, commit to having us write any offers for ANY properties you see- no matter whose properties they are. Because in the long run- a qualified, knowledgeable Buyer Agent will save you more money, more time, and more headache than calling every sign, web site or open house agent and not being committed to having someone who is working day in and day out until they find the home for you. And quite frankly, there are agents out there that will ask you "do you have an agent you are working with?" and even if you say yes- the smart ones will ask "Are you totally committed to them and HAVE YOU SIGNED AN AGREEMENT with them?" (I do!) and if you haven't then you are fair game. So take a chance and reveal yourself so we can assist you with your real estate needs. |
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While the real estate market is clearly a Buyer's market today with low low interest rates and plenty of distressed homes on the market bringing the values to their all time lows; it's harder than ever for a Buyer to qualify for a loan. Home buyers may not realize that the climate for mortgages has changed DRASTICALLY from days long past. Lenders are reluctant to make another 'bad" loan, and in their quest to properly qualify the borrowers they have gone overboard and the loan process is certainly the most frustrating process of a home purchase today. Now, because most Seller Agents have experienced the frustration of most every escrow not closing on time due to the lender, a good Seller Agent who is looking out for their Seller will require good proof that a Buyer is qualified to purchase. This includes not just a "Pre-approval letter" from days of old; which wasn't much worth the paper it was written on; but most times the Seller Agent will want to see credit scores of all borrowers, proof of funds to close and underwriting conditions. For Buyers what you MUST do before even looking for a home is to talk with a qualified loan officer and get your initial loan approval completed. This includes providing tax returns, W-2/s, current pay stubs, bank statements and getting your credit run. The percentage of errors on credit reports is HIGH. If you find out there are errors on your report up front then you will have the time to have your loan officer help you to correct those errors so that not only can you qualify for the loan you want, but you can get the best interest rates and terms. There is almost NO product out there for borrowers with scores below 620. If you are receiving Gift Money for help in purchasing your home; there are NEW RULES as to how this money must be tracked and shown to the underwriter of the loan. The Gift Giver must show where it came from as well. Don't do anything without first checking with your loan officer; paying down or paying off credit cards is sometimes best done from escrow when the loan closes (another tracking of funds that the underwriters want to see), also if you have accounts in collections that are old and you 're-activate' them by making a new payment to them you can seriously damage your scores. You need to work in close contact with your loan officer so that when you qualify on day one, you still qualify when escrow needs to close. These days the lenders will run credit again at the last minute before closing, and call to verify employment and bank funds. What this means is once you have decided you want to purchase a home, don't change jobs and if it's unavoidable let your loan officer know immediately so they can help you provide a letter of explanation to the underwriter and get approval. Also, don't go buy a car, furniture, appliances, DON"T BUY ANYTHING- until AFTER you get the keys to your new home and are moved in. Serioulsy, if you signed the loan papers and think you are 'safe"; think again. Before the lender FUNDS the loan, they will check you again, and it all can fall apart if they even see a 'credit inquiry' for a car loan or credit card, much less a big purchase to celebrate your "new house". Bottom line is keep communication open with your REALTOR and your loan officer. Pre-Approve BEFORE you start looking, know your total approved monthly housing cost; loan payment includes paying back the loan and interest, plus impounds for monthly property taxes, insurance, also make sure you add monthly HOA dues if applicable. Many loan officers will forget to mention this so make sure ahead of time to contact insurance companies for quotes find out what your annual homeowner's insurance will cost and break it down monthly to make sure it fits into your total monthly payment that your loan officer provided. The policy needs to be 'bound' and the quote given to escrow before the closing so the funds can be paid for the entire years cost plus a few months on hold for the renewal at the closing; these will be added "closing costs" to your loan. This can be another last minute deal killer. In San Diego's current housing market almost every listing by a competent REALTOR will have mandatory proceedures for the Buyer's Agent when presenting an offer. A competent Buyer's Agent will know that all Buyers need to be pre-qualified; completed loan application and verification of income, assets, employment and credit scores; before an offer will be considered by a Seller and their REALTOR. If you don't already have a good loan officer to take care of this for you then ask your REALTOR for a referral. Most REALTORS have a few good loan officers that they work with, so if you need a recommendation let your agent know and they will be happy to provide you with some names. The home buying experience can be pretty overwhelming, but with the right REALTOR and armed with information and educated on what to expect it's well worth it. The market has never been better with lower than low interest rates and prices down along with a great deal of inventory. With a little bit of homework and a good REALTOR, the dream of home ownership can be yours!
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Fannie Mae to adopt Foreclosure Avoidance Program similar to government HAFA already in place Beginning August 1, 2010 FANNIE MAE backed loans will be eligible for a foreclosure avoidance program similar to the current HAFA program already in place to help homeowners that can't qualify for a loan modification, or that have been unable to make the trial payments on an approved modification. The plan requires the homeowner to meet certain criteria to qualify, but once in the program there are some benefits including a more streamlined short sale process, forgiveness of all debt on both first and second loans after an acceptable short sale has closed, and up to $3000 for the homeowner to help pay for moving expenses. There are strict criteria to qualify, and there may be some downfalls to the homeowner if they are accepted into the program (including the possibility that you will have to start making payments again until it sells; and if it doesn't sell you will automatically lose the house by a Deed-in-lieu of foreclosure which is virtually a 'voluntary' foreclosure on your credit report and requires you to voluntarily sign the house over to the mortgage holder and when the property is verified to be left clean and not vandalized of appliances and fixtures you will receive your "cash for keys" payoff from the lender. For more information on how these Foreclosure Programs work and to see if you qualify and if it is the best solution for you- Call me at 619-913-7783. There is no cost or obligation; and remember that doing nothing will not stop the foreclosure- You do have options and we have successfully stopped auctions and avoided the foreclosure for many homeowners. A foreclosure stays on your credit for 7 years, working with a qualified, experienced Realtor to sell your house for less than what it's worth on approval from your lender(s) will avoid a huge, long-term hit to your credit score and enable you to purchase again in 18-24 months, not to mention that your credit score will recover much sooner giving you better rates on other loans in the future (auto, credit cards etc) Call today! My team of experienced negotiators can help you!
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A record number of homes were lost to foreclosure in the US in the first quarter of 2010. According to RealtyTrac Inc. the number of U.S homes taken over by banks is up 9% the first quarter compared to a year ago. Additionally, households facing foreclosure grew 16 percent in the same period and 7 percent from the fourth quarter 2009. More homes were taken over by banks and scheduled for foreclosure sales than any other quarter going back to at least 2005, when RealtyTrac first began reporting data. California accounts for the largest amount of homes facing foreclosure... roughly 23 percent of the nation's total. In my opinion this is just the tip of the iceberg. We have a backlog of properties that the banks have been holding off the foreclosure sale for various reasons, drawn out and postponed foreclosures waiting for short sale approvals or loan modifications, and the avalanche of Pick-A-Pay or Option ARM loans coming to the end of their five year teaser period. The flood of homes will break the dam at some point. Modifications are seeing a failure rate of over 50%, jobs are still being lost, and the 'teaser loans' are unsustainable at their actual amortization payment rate, nevermind the tens of thousands of dollars that most homeowners added to the loans principal amount over the past five years when the payment required didn't even cover interest only on the loan. These loans will give 'upside down' a new meaning. MANY of these 'creative' loans were originated on California properties since our values reached a point of impossibility for most mere mortals to purchase. I can only imagine (and have nightmares about) what the government bimbos will come up with this time in order to attempt to stem this flood. I say, let it rain!! Flush it out and get it over with... enough bailing out; let's flush it out. What's your view?
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Rising Interest Rates, Homebuyer Tax Credit expiration and possible changes in FHA lending could make it harder to qualify to purchase a home. If you are looking to purchase a home, NOW is the time. Interest rates will most likely take a jump when the government stops buying mortgage backed securities this month and they are left to be purchased by investors. The common consensus is that the investors will want a bigger rate of return on their purchases and will thus require the notes to carry a higher interest rate in order to purchase it. The government home buyer credits are also set to expire. In order to qualify you must have your accepted offer in escrow by the end of April and close by the end of June. I think there may be a possibility that they may extend again- I feel like the housing market is still way to shaky to mess with any of the incentives that are in place to keep people buying. Measures will need to be taken to keep rates low as well, although I don't think they'll be able to stay as low as they have been. I think a modest jump of 1/2% is probably where it will land. FHA loans are also in discussion of being altered. Changes that are being looked at include: Raising down payment requirements from 3.5% to 5%, raising the initial mortgage premium payment from 1.75% to 2.25%, and lowering the maximum seller contribution from 6% to 3%. Although these changes would lower the government's risk on defaulted loans and raise more funds for the FHA, many officials fear that these changes will lower the buyer pool enough to make the housing recovery last even longer. SO, stay tuned to see what changes are made, and in the meantime; check your credit, pay down your debt, and start saving your pennies so you can get in on the best buyers market you will ever see in your lifetime!
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The government program that gives homebuyers that have not owned a home in the past three years an $8000 credit is set to expire on November 30th. Since the purchase of homes is critical to the recovery of our economy; much more so than giving $4500 for a pile of junk vehicle trade-in program; I would hope that Congress would pass a new measure to extend, and expand the program. The program started out as a $7500 "credit" to the homebuyer which was actually a 15 year interest free loan which had to be paid back over 15 years. The new $8000 credit is actually a 'gimme', the only stipulation is that you must stay in the home for at least three years and the money is yours to keep. Hopefuls are pushing for a re-vamped extension to the credit that will raise the amount to $15,000 and open the credit up to all homebuyers. There are income limitations to the credit as well as minimum home prices (which don't really matter here in most of California, and definately not in San Diego). San Diego's $10,000 additional credit to buyers of new build homes has already run out of money and there are no talks to fund any more into it; likely because there is no money to be found with California's precarious financial situation. Bottom line for those looking to buy- the time is NOW; Home prices have dropped in some areas over 40%, interest rates are at record lows- 4 7/8% a few days ago! FHA loans are pretty easy to qualify for; kind of like the old "sub-prime" loans in my view.. more on that later :-) Credit scores standards are pretty low, down payments are a low 3.5% (and can be a gift), and the FHA appraisal standards are not as stringent as they once were. Oh, and they just RAISED the debt ratios to as high as 55%, meaning your total debt including housing can be up to 55% of your income. Now, you do have to prove income- no more 'stated' loans. You do need to be aware that they are a lot of buyers out there in the starter home market, including investors with cash. Cash offers are turning out to be "King", so it will take some persistence to get a property. Make sure you have an "Iron Clad" pre-approval from a lender who has done the entire application process, income, assets, proof of funds to close etc. everything done but 'plugging in the house'. Otherwise you may find yourself losing a property for not performing fast enough and the deal will go to the next buyer in line... Yes, this has happened to one of my buyers- after 3 1/2 long months and finally having an offer accepted. You will have a better chance of getting your offer accepted if you don't have to have an FHA loan and can qualify for a Conventional loan, you'll need at least 5% down (20% is best to avoid mortgage insurance) and higher credit scores- in the 720 and higher range. If you don't have a reputable loan officer, I can recommend a couple. If you'd like to search the MLS like a Realtor, shoot me an email DebEspo@aol.com and I will set you up on my ListingBook site so you can search all areas of San Diego.
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The government and the journalists seem to leave out some of the important stuff when they tout the "wonderful" lending opportunities of Fannie Mae and Freddie Mac government backed loans. We need to remember that Fannie and Freddie are in the tank, so to speak, having been bailed out by our tax payer dollars for their bad business practices started way back with the Democratic Jimmy Carter administration where the "everyone should be able to be a homeowner" started.. . Blame aside, the basic premise is that home buyers will "pay to play" with a government backed loan. Yes, you can qualify for one of these loans with a lower credit score than conventional lending- but you'll pay for it. Here's the basics: Starting April 1 Fannie and Freddie are raising their mandatory fees, toughening credit score requirements and down payment rules. New guidelines include fees to borrowers who have downpayments of less than 30%. Yes, you read it right.. 30%! (And you think the government may have a bleaker outlook on housing prices than they are letting on?- 30% is some MAJOR protection from prices that have already fallen some 30% or more already in some areas) Example: If you have a 699 FICO score and make a down payment of 25% you will now get a 1.5% "delivery fee" charged at closing. Score of 700-720 will pay .75%; and even a score of 739 will be charged .25%. Condo properties are not looked on favorably at all. Basically builders went wild. Condo conversions of old apartment buildings and condo saturation in Downtown San Diego, Miami, Vegas. Investors sucked them up thinking they'd make a killing when they sold them later and builders didn't look up from their projects for long enough to see the writing on the wall of this coming crash. Condominiums have fared the worse in this housing mess- dropping in value in excess of 50% (so far). Projects stand empty and some not completed, builders bankrupt. Bottom line.. Lenders and investors don't like condos and want to be paid extra for providing funding on them. If you cannot come up with at least 25% downpayment on a condo you will be hit with a .75% add-on penalty, no matter what your credit score is, simply because its a condo. Duplexes, where one unit is owner occupied and the other rented, will be charged a flat 1% fee by Fannie Mae- even if you have an 800 FICO and make a 50% down payment. If you want to refinance and take cash out you will be forced to pay as much as 3% if you have FICO scores on the lower end and modest equity in the property. Fannie Mae and Freddie Mac, operating under control of federal regulators since September 2008, are bleeding BILLIONS of dollars. They claim that these fees target some of the loan catagories and credit risk combinations with default rates "four to eight times" the rate of other mortgages in the companies portfolio. Again, they are correcting going forward on PAST lending patterns that loaned money to anyone with breath. Again, not too savy investors, second home buyers, people who thought "if I don't get in now, I'll never get in" and "buy it today- who cares the cost or mortgage payment, the bank doesn't care because they'll give me the loan" and thinking they'll sell in six months to a year and pocket a huge profit. Now that the homes are back in affordable range, and the responsible borrowers, and investors that waited to buy because they knew they couldn't afford those crazy prices a couple years ago get to PAY for everyone else's mistakes that got us in this mess in the first place. Brilliant. And one more reason that this mess will take a LONG time to play out.
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The median price for all So. Cal homes combined last month was $250,000- This is down 10.1% from $278,000 in December- and down a whopping 39.8% from January 2008 when the median price was $415,000. All total Southern California is down 50.5% from it's peak of $505,000. (DataQuick) As you can see we are nearing a realistic price range for thousands of homebuyers. Affordability is at an all time high, which is absolutely necessary now with the super strict underwriting guidelines for home mortgages. The lenders have gone ultra paranoid and over corrected their lending standards; giving a loan to anything that could fog a mirror with breath was ultra stupid- and now everyone is paying for the lender's bad judgement on past loans. Prepare to wage a battle and prove your worthiness again and again and again and with patience you may qualify to purchase a home at these record low prices and interest rates. Know that you must have superior credit for the best rates; over 740 gets the best interest rates and lowest fees- if you are ranked below a 620 then consult with us or someone who can put you on a mission to improving your credit scores. Income must be proven and preferrably no more than 40% of your income should be spent on your house (including taxes and insurance). If you have other payments such as credit cards or car payments then you limit the amount available for a house payment and thus qualify for a smaller mortgage. Typically 45% is the maximum debt to income ratio allowed; so if you gross $5000 per month then all your bills and house payment (PITI) cannot be more than $2250 per month. So if you are trying to position yourself to purchase a home in this bargain basement atmosphere then DO NOT purchase ANYTHING until after you have got your keys to the house and are moved in- because the lender will check your credit again right before they fund your mortgage loan. If you are looking to be a buyer in this amazing market please get on our buyer's list. Visit www.SaveMyHomeSanDiego.com and go to the buyer tab and enter your information. We get some amazing deals with short sales and foreclosures and can help you to get the house of your dreams before it goes out to the masses on the Multiple Listing System. If we have your pre-requested criteria then we can set up a search to find your house sometimes before the seller even knows they are going to sell it! If you are going to take advantage of this historic home buying opportunity then you need to start setting yourself up now- Credit, loan options, cash reserves etc. We can guide you through the system and set you up to become a homeowner in 2009!
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The basic principles for Hope Now; a program overseen by a board made up of Secretary of HUD, Secretary of Treasury, Chairman of the Federal Reserve Board and the Chairman of the Federal Deposit Insurance Corp; were that: Lender permission needed for the program to work; Lender to take a "short pay" and FHA buys the current loan at 90% of market value; Original owner to share future equity gains with FHA; Homeowner to pay for FHA insurance 3% upfront and 1.5% per year; payments adjusted to borrower's ability, including interest rates to get a 31% payment to gross income level for first five years; and new loans must be 30 year fixed. Eligibility for the program: Only owner occupants, only those who cannot afford their payment- in excess of 31% gross income, only those willing to sign that they have not intentionally fallen behind just to qualify for program; those willing to sign that they did not lie on their original loan application (humm... were they not called "liar loans" for a reason??) Only those willing to have their income verified by the IRS, only situations where the first loan is the only remaining loan (gotta get rid of those 2nds, HELOCs, 3rd's first). The program is a $300 Billion (with a B) expected (used very lightly here..) to help 400,000 homeowners. December 15, 2008 Hope Now said: "Hope Now coordinates a nationwide campaign to reach homeowners who may be at risk of losing their homes. So far, Hope Now has sent almost 1.9 million letters. Almost 17% of the homeowners receiving the Hope Now letters have contacted their servicer." They have also said, "Our efforts to streamline the foreclosure prevention process are clearly working. Hope Now members are helping more homeowners avoid foreclosures than ever before." I guess helping more homeowners than ever before can easily be quantified by Hope Now when the 'before' number was zero. But, here's the kicker- HUD Secretary Steve Preston says, "The government's loan modification program is a dismal failure, and Congress is to blame." Hope Now, previously lauded as the centerpiece of economic recovery, was supposed to modify the loans of 400,000 homeowners and help them avoid foreclosure. Instead, it's only helped 312 homeowners since it was launched in October." So the government program mails out 1.9 Million mailers, 323,000 homeowners respond, and a dismal 312 get help. Proof positive that the government is NOT the answer to our problems. Michael King, the author of 'Loan Mod Program Failing Badly" states; Borrowers must pay high interest rates and fees, including 3% upfront insurance premium and 1.5% yearly premium. They have to provide two years of financial records and sign a statement that they didn't give false information on their first loan application. Those requirements could be impossible to meet for many stated-income borrowers. Dec. 15, 2008- this modification program was modified in 'hopes' that the Hope Now program would benefit more homeowners. Increased the loan to value ratio (LTV) from 90% to 96.5% (let's see; most homes were purchased with 100% financing and on top of that have lost about 30% of their value since- so somebody's gotta okay a write off worth a chunk of change) Permit upfront payments to lien holders (buying second mortgages from banks) Extend the mortgage terms from 30 years to 40 years, creating the possibility that the reduction of the borrower's monthly payment would make it possible for them to qualify.
The Streamlined Mortgage Modification Plan: Start date of Dec. 15, 2008 Borrower must be 60 days late, cannot be in bankruptcy. owner occupied single family residence Current LTV must exceed 90% of property current value and the goal is to reduce the payment at least 10% New payment cannot exceed 38% of the owner's gross income. (Keep in mind that the loan amount v.s your income must make sense at that 38%- If it doesn't-- 99.9% of the time the lender will say you don't qualify; not "we'll lower the loan balance!!) The lowest interest rate the program can go is 3% for five years and whatever the reduced starting interest rate is,it adjusts up 1% per year starting year six. This continues until the "Cap the life of loan" is reached from the original loan terms. The borrower must supply a hardship letter stating current situation and financial circumstances. All income will be verified. If borrower qualifies, all foreclosure fees, back interest, late taxes and insurance can be added to the principal.
The REAL lender goal: All modifications must net the lender more than the foreclosure process would or the modification won't be done. So much for Hope for the Homeowner- since its ultimately "if it's in the lender's best interest". How is the modification process working? Defaulted mortgages lucky enough to get modified are going back into default within six months 53% of the time. WOW. After three months nearly 36% of borrowers had re-defaulted, and after 8 months the number rose to 58%. Perfect reasoning to assume that close to 60% of borrowers should never have owned a house in the price range they purchased in the first place- IF they should have even been a homeowner at all. This seems to be a tough pill for some homeowners to swallow. Seeing how it was soooo easy to qualify to purchase a house they NEVER should have been able to purchase in the first place; they cannot see the logic in letting go of a house that has (in the case of So. Cal. homes) over $100,000 in negative equity that will take in my estimation over 10 years to recover. Sure makes more sense to short sell the house, wait two years until your credit allows another government backed loan and purchase an affordable house with FHA financing at a modest 3.5% down; which should be fairly easy to save when you aren't spending over 60% of your income on a house that isn't worth near what you paid for it in a disillusioned frenzy of buyers who thought they'd be forever priced out of the market. Look on the bright side. The housing costs are now almost near where they make sense! Jump out and get back in at the right price.
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In an effort to stop homeowners from purchasing a new home and then defaulting on their current home (termed 'Buy & Bail' in the industry); the FHA is making it harder to qualify for a federally insured loan to make the new home purchase. New guidelines effective September 19, 2008 require the borrower to be relocation to a new job location, the current home must be outside reasonable commuting distance from the current residence location, the borrower must have a fully executed lease with at least 1 year term from the closing of the new residence mortgage (some major juggling will have to happen to accomplish this..), the borrower must have receipt of security deposit &/or 1st month's rent, the current home must have at least 25% equity from current appraisal. If these criteria are not met then you must qualify for the loan with income to pay both mortgages WITHOUT the credit of the rent, and you must have 12 months of payment reserves- principal, interest, tax and insurance- to qualify for FHA financing. An FHA loan allows the borrower lower credit score requirements, low down payment amounts of 3-3.5%, and higher debt to income ratios than most conventional loans. FHA then adds on a percentage of the loan up front, and monthly payments from the borrower that pays for mortgage insurance to cover the loan with a less than 20% down payment.
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Why Foreclosure Relief Act is NO Relief..
The government passes the Foreclosure Relief Act off as a help to homeowners in distress and facing foreclosure. FHA, the Federal Housing Authority proposes to "help" in an act that actually turns the FHA into a profit center at the expense of lenders and homeowners. Here are some of the details of the bill that may surprise you:
- The new conforming limit will be raised to $625,000 from it's current limit of $417,000. (this is a good thing.. ONE thing done right!)
- You cannot have a HELOC, 2nd, or any other mortgage on your home. You will either have to pay them off or negotiate them out.
- The loan must have been originated between June 2005 and June 2007.
- You must get your current lender to write down the loan amount to 85% of the CURRENT APPRAISED value! (good luck!)
- and this is so you can finance in the 3% fee that FHA is going to charge you for the pleasure to refinance with them guaranteeing the lender from any further losses ( I think they may have taken all the losses there were.. thank you very much!..) Just so you catch this; (and the following FEES that the FHA will be charging for this service) 3% on a $300,000 loan is $9000.00 !! (Thus, the reason that the lender must write down the balance of the loan, so that when FHA puts their HIT in, you don't go over the maximum allowable loan-to-value of 95%)
- WAIT! there's more... FHA is also going to charge you 1.5% per year to pay for the insurance they are placing on the loan to protect the lender from further losses. (ding, ding, ding)
- Oh. THAT"S NOT ALL!!! When you refinance or sell- Yup, the FHA will take ANOTHER 3%.. (thank you very much)
- and.. for the final kicker... the Federal Government is now your homeowner partner. You may ask "My Partner?" .. yes, when you do sell Uncle Sam will take AT LEAST 1/2 of your profits when you sell your home! 100% the first year, 90% the second year and 10% less each year until the minimum of 50% is reached. (How NICE of them yes???)
- PLUS: no 2nd mortgages or HELOCS for 5 (five) years except for very limited circumstances.
- There is also listed a First Time Home Buyer "credit" of $7500. Described as being paid back over 15 years at no interest. So, it's an "interest free loan"- NOT a true credit. (at least not in my dictionary)
Here are some other stipulations of the new loan:
- You must prove that you did not lie on your application to get your current loan. (How they are going to do that.. I don't know..)
- NO other debt on the house!
- You must PROVE your income with 2 years tax returns (could be a REAL mess if you did fudge a bit on your current loan no??)
- This must be proven to be your PRIMARY residence
So, Are you just chomping at the bit to sign up??? Well, it won't take effect until October 1, 2008.
Unless you want to wait AND pay A LOT for the priviledge of having the FHA help you out. Call us TODAY and find out how a low cost loan modification just may be the answer you are looking for.
CALL TODAY! (877) 265-1409 xt 800 See my web site for more information... Deb
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As most of you have heard, the government is attempting to create solutions for what they term the "Subprime Meltdown". One of the steps taken was to raise conforming loan limits that qualify for Fannie Mae and Freddie Mac government backed loans, and the FHA Loan Limits. Southern California has not been able to use FHA loans for years because the past maximum loan amount was $417,000, much less than our "Old" average home price. The new limit for our area 697,500, is being put in place by most lenders and several lenders are geared up to start this new limit on Monday March 17. While these changes will help out "some" homeowners, it is definately not the solution to the housing problem. Reasons that I feel this: A lot of markets, including Southern California, are considered 'declining markets'. In this case almost all lenders are automatically deducting 5% of the value from the appraisal value- so, not only do you have to come up with 5%-20% down payment (depending on credit score, loan type etc) but also another 5% due to declining market deduction taken off the maximum loan amount. A very large number of homeowners either purchased or refinanced in the past 2-3 years with adjustable loans and at 80% or more of their home value at that time- which turns out to be the absolute height of a frenzied market. Most areas have declined in value by double digit numbers and there is NO equity or even the situation of what we call 'upside down' value on homes. So what is owed is more than what the house is worth. There are plenty of A paper, high credit scored borrowers that got caught in this situation. This is certainly not just a 'subprime loan' problem. IF the banks don't work with borrowers in the above situation, there is no other option other than to short-sale the house (meaning: sell if for LESS than what is owed) or letting the bank foreclose on the house or just handing the bank the keys and deed. When a glut of these homes come on the market- and we are just at the tip of the iceberg on the number of these homes that are getting ready to face this situation- then you have the other homeowners in the neighborhood that realize their homes are not worth what they owe, and even though their payment is not adjustable, and they can still afford the home loan payments, there may be a point when they realize that the cost to stay is just not worth it and they too will give the bank their keys and walk. There is an area in Corona where homes sold for $1.2M two years ago, now more than half the homes are bank owned and foreclosures and the values are now $650,000!! Kind of hard to imagine that someone oweing even $850,000 and in a loan they can afford would stay and pay waiting God knows how many years for the market to hit bottom and then to rise again to the point where it was. Finally, even if someone has a bit of equity to be able to refinance out of their adjustable loans the banks have severly tightened up their lending standards. Now you MUST come in with some money to create some kind of equity in the home- no more 100% home loans (FHA requires 3% down plus .55% of the loan amount per year to pay mortgage insurance- the plus for FHA is that they are not YET taking the 5% declining market value hit off the appraisal), depending on your credit a 95% loan-to-value may be possible. Also you must have documentable income, assets that are liquid (cash) and have value of at minimum, 3 months of your monthly payment (principal, interest, taxes, and insurance- PITI), and your debt ratio (income vs expenses) has to be reasonable. Stated income loans are very hard to qualify for. Basically lenders want proof you can afford the loan. In my opinion this housing disaster will last until late 2010 into 2011. Bank owned homes will be more than half of all the homes for sale, the auction companies will not be able to keep up with the amount of homes that the banks need to get rid of. The market will come back, but at a more reasonable steady pace. Looking back home prices rose 200% along with wages at about the same amount over almost 20 years. Over the past 5 years houses again rose almost 200% and wages rose less than 5%; not realistic in affordability of homes is it?? So, hang on for the ride- real estate is still a great investment. If you are looking to buy a home you are one of the lucky one! Congratulations! You will get in at the right time and have an excellent long term fixed interest rate on your loan. Four things I can help you with: 1. Did you purchase at the height of the market and need to have your property taxes re-assessed? I can get you comparable homes to send in with your request to the Tax Collector that show the new lower value of your home. 2. Looking to buy a home at this BEST time in the market? Go into my home search on the web site and input your perameters- Or shoot me an email and I can put you directly into my MLS search and everytime a home meets your criteria you will receive an email with all the information about the home and when you see one you want to look at let me know and we can schedule a viewing. 3. Need to clean up your credit? I can help you get your credit score up so that you can qualify for the best loan rates and terms saving you thousands of dollars over the life of your loan. 4. Need help working with your current lender in negotiating your adjusting loan? I have experience in what they will and won't do and how to approach them in getting the best results of a loan work out so you don't lose your home. At any cost- do not just ignore the problem, it is in the bank's best interest to help you. They really DO NOT want your home back, that is not their business :-) I can at least help you to discover your options. Comments, Questions: DebEspo@aol.com
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