CNBC: Home Mortgage Lenders Easing up on Home Loans

The new year may bring new opportunities for consumers hoping to get a home mortgage.  More lenders are reporting easing credit standards, according to Fannie Mae, and expect standards to ease rather than tighten in the near future.

This could help affordability in the housing market, which has been suffering under both tight credit and tight supply of homes for sale.

The share of lenders who expect to ease standards for government-backed loans rose to 16 percent, and the share expecting to tighten fell to 2 percent, according to a Fannie Mae survey. This is across all types of loan products.  A total of 213 senior executives completed the survey from Nov. 4 to 13, representing 194 lending institutions.

“These current practices and expectations toward easing among lenders compares to a historically relatively tight mortgage credit standard base,” said Doug Duncan, senior vice president and chief economist of Fannie Mae.  Duncan, however, points to several challenges to improvement in the housing market in 2016, affordability for first-time buyers topping the list. There are still very few starter homes on the market, and home price appreciation is lapping household income growth. “Lenders’ thoughtful easing of credit standards should help mitigate some of this affordability decline,” he said.

The potential for rising interest rates, which would narrow the field of customers for loans, may increase competition among lenders and force them to ease some of the extra safeguards they added after being sued by the government for billions of dollars over bad loans dating back to the last housing boom.

Government-sponsored enterprises Fannie Mae and Freddie Mac as well as the Federal Housing Administration have been clarifying lender liabilities for bad loans and have been pushing lenders to ease up as well.

Borrowers may also benefit from a new credit scoring model. Fannie Mae announced recently that it will start using so-called trended data in looking at mortgage applicants. This is a wider look at a borrower’s credit history, which could help boost some scores.  Using trended data, the percentage of consumers in the super-prime risk tier would increase from 12 percent of the population to 21 percent, according to a recent study by TransUnion. These consumers generally have the greatest access to new loans at the lowest pricing.

“We are a long way from returning to prerecession levels in terms of mortgage accounts, but changing consumer preferences for housing also may play a role in this slow recovery,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit. “If the economy continues to perform well, we believe the net number of mortgages will increase over the next year.”  Despite the potential easing in credit, about two-thirds of consumers surveyed by the National Association of Realtors think it would be very or somewhat difficult to get a mortgage today.

Another survey by Berkshire Hathaway HomeServices, a network of real estate brokerages, polled 2,500 homeowners and potential buyers and found 67 percent of potential homebuyers thought mortgage rates today were either “average” or “high.” Today’s rates are actually very close to record lows.

courtesy of:  Diana Olick, CNBC and

IVAN SOLIS, JR.  / Sr. Sales Executive, Title 365 / Ivan.Solis@Title365.com  / (619) 804-9000

4 Reasons Why 2016 is a Good Time to Buy a Home

With 2016 fast approaching, now is the time for renters to get off the sidelines, start organizing their finances and take on the excitement of homeownership.

But given the recent history of the housing market and Americans’ increasing need to stay mobile, it is understandable that it can be nerve-wracking to invest your hard-earned money in a home.

However, unlike years past, all key economic indicators are ripe and there are two major changes to the mortgage process that help make 2016 a good year to buy a home.

1. Rental rates continue to rise

With the on-going low supply and high demand of rental units, rental rates are continuing to rise. In the last 12 months, 88% of property managers have raised their rent prices. And there is no sign of that stopping given that 68% of property managers predict their rental rates will rise again in 2016.

2. Interest rates are historically low

Freddie Mac’s latest survey of lenders shows little change in the 30-year fixed-rate mortgages, which averaged at 3.89% for the month of September compared to 4.16% a year ago. Low interest rates make home buying more affordable.

3. Clear mortgage terms

The recent TRID announcement has mandated clearer terms at the closing table. For first-time homebuyers, this is a huge benefit because it will ensure there are no surprises at the closing table. These clear terms will help homebuyers better understand both their financial commitment and what is expected of them.

4. Down payment protection will be available

Writing a check for a down payment on a home is often one of the largest investments someone will make. Down payment protection is a new option that can give modern homebuyers the flexibility they need to more confidently and securely buy a home. When homebuyers put less than 20% down at closing, this kind of coverage protects their down payment just like private mortgage insurance protects the bank.

Given that the average employee tenure in the U.S. is 4.6 years overall, and 3 years for millennials, it’s understandable that the modern homebuyer may be nervous to commit to living in one location for an extended period of time.

However, the current state of the market and these major mortgage changes will help to ensure that when life happens, the homebuyer won’t be completely out of luck when it comes to protecting their nest egg.

courtesy of:  http://www.housingwire.com/

6 Reasons to Reduce Your Home Price

While you’d like to get the best price for your home, consider our six reasons to reduce your home price.  Home not selling?  That could happen for a number of reasons you can’t control, like a unique home layout or having one of the few homes in the neighborhood without a garage.  There is one factor you can control:  your home price. 
These six signs may be telling you it’s time to lower your price.
1. You’re drawing few lookers.
You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.
2. You’re drawing lots of lookers but have no offers.
If you’ve had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home? An overly high price may be discouraging buyers from making an offer.
3. Your home’s been on the market longer than similar homes.
Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you’re pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there’s something wrong with it, which can delay a sale even further. At least consider lowering your asking price.
4. You have a deadline.
If you’ve got to sell soon because of a job transfer or you’ve already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.
5. You can’t make upgrades.
Maybe you’re plum out of cash and don’t have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn’t as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.
6. The competition has changed.
If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what’s still on the market? What new listings have been added since you listed your home for sale? If [up-to-date] comparable home sales or new listings show your price is too steep, consider a price reduction.

courtesy of:  http://www.clientdirect.net/newsEdit.asp

Mortage Loan Documents To Change August 1st

On August 1, 2015, loan documents to homebuyers are going to be simpler and easier to understand.  Two new forms, a Loan Estimate and a Closing Disclosure, will replace the HUD-1 Settlement Statement, the Good Faith Estimate, and the Truth-in-Lending disclosure form.

The purpose of the new forms is to simplify closing information and make it simpler for consumers to compare their estimated costs to final costs.

Created by the Consumer Financial Protection Bureau  [CFPB] with input from consumers and industry groups such as the NAR, the new forms will hold lenders to three-day deadlines so that consumers will have the information they need well before closing.

The three-day rule applies to both the Loan Estimate and the Closing Disclosure. Buyers should receive the former three days after applying for a loan and the latter three days before closing. Buyers should take this time to look carefully for any changes between the Loan Estimate and the Closing Disclosure.

Consumers will have a more transparent experience, including less obfuscating jargon and greater clarity concerning closing costs. On the new forms, the interest rate, monthly payments, and the total closing costs will be clearly presented on the first page, making it easier to compare mortgage loans and choose the one that is right for them.

Important information will also be highlighted, including the costs of taxes and insurance and how interest rates and payments may change in the future. This information will help consumers decide whether they can afford the mortgage loan and the home, now and in the future.

The new forms also warn consumers about features they may want to avoid, like penalties for paying off the loan early or increases to the mortgage loan balance even if payments are made on time.

Consumers will appreciate that the first pages of the new Loan Estimate and the new Closing Disclosure look the same, so they can more easily compare costs. If discrepancies are found, consumers can contact their real estate agents or their lenders for more information.

courtesy of:  http://realtytimes.com/consumeradvice/mortgageadvice1/

Are You In A Fast Real Estate Market?

Trulia recently released a report entitled, “Where sales pace is fast in US.” The report compared data from the period of February 5th to April 5th to see which Metro areas had the highest percentage of sales coming off the market in two months or less. Obviously, most of those were sales, because few homes are taken off the market in less than two months.

In the US the fastest market was San Francisco with 74% of listings disappearing in two months. Surprise? Not! Second was San Jose at 70% followed by Oakland -70%, San Diego – 67%, Orange County – 59%, Seattle – 58%, Sacramento -58%, Los Angeles – 57%, Ventura – 57%, and Salt Lake City-55%.

What does this mean to homeowners? You can expect a faster sale on average than in the past few years. The number of listings is low in comparison to other normal years. Therefore, if you are house hunting, get approved for a loan before going outside and be ready to make an offer when something you like appears. Pull the switch.

 For sellers, make sure any offer is realistic from a reputable person who has loan approval. Loan approval does not end all your problems, but it is sure a better start than any other except a cash offer and there does not seem to be that many cash buyers at the moment. The big investors seem to have pulled out of the market when distressed sales slowed down.

courtesy of:  Duane Gomer Newsletter

The 3 Most Important Responsibilities Home Buyers Have

The American dream of owning a home is something everyone should have if they want it. You should be able to live where you want and enjoy the features of your environment that help you relax, entertain, play, and do more of the things you enjoy without the restrictions imposed by a landlord.

You can own a pet, build a treehouse, paint the walls your favorite color, and play music and videos as loud as you like without disturbing your neighbors. That’s the essence of the dream — independence.

For most first-time buyers, it’s better to accept that for dreams to come true, you have to do the groundwork. Yes, you will be far more independent than you would as a renter, but you will still have some very real responsibilities to make homeownership work. Here are the top three responsibilities you’ll have as a homeowner.

Financial Responsibilities

You owe your lender timely payments. Paying on time helps you build your credit. With great credit, you can take on more projects such as remodeling, or you’ll be able to buy furniture, cars or other things you want with lower interest on your payments.

Your debts should never be more than 40 percent of your income. If you get overextended, you’ll have problems meeting the minimum payments. Instead, limit the amount of credit you actively use and pay off balances every month. Don’t add new charges until you’ve paid off your balances.

You should also be in a position to save money, which you can do several ways. You can put money in your 401K, you can pay extra on your principal every month, or you can buy bonds or invest in the stock market, according to your tolerance for risk. You can put money in a safety deposit box or under the mattress as long as you are saving rather than overspending.

Common wisdom is to build six months of cash so you can continue to make your house payments if you lose your job or become ill. You need savings for emergencies, large expenses such as student debt, and retirement.

Neighborhood Responsibilities

When you buy a home, your household becomes part of the neighborhood. You can influence whether or not the neighborhood prospers or declines simply by the way you treat your neighbors and your home. It’s up to you to uphold or to set a higher standard for the neighborhood by keeping your lawn and trees trimmed, your home freshly painted, and toys and trash picked up from the entry.

This is the way you can protect your investment and those of your neighbors. It’s one of the reasons many neighborhoods have homeowners associations — to protect values by standardizing safety and maintenance for the community.

To get the benefits the HOA provides such as higher and consistent home values, you have to pay your dues and obey the covenants. You can volunteer to help or you’ll have to abide by the decisions others make. Before you buy a home in a HOA-managed community, read the covenants so you’ll know what you’re getting into. If not being able to use certain exterior paint colors bothers you, then don’t buy the home. Find something else.

Household Responsibilities

You owe yourself and the other members of your household the best life you can possibly provide. Buying a new home is a great time to step up your lifestyle and enjoy what your new home and the community has to offer.

Your home should help you be who you want to be. That’s the purpose of shaping your environment. You have control over whether you entertain like Martha Stewart, paint in your studio like the next Picasso, or grow a lawn as sleek as the Augusta fairways.

Choose a home that meets as many needs as you can within your means. Separate bedrooms for the kids may be doable, but you may have to compromise on a Jack and Jill shared bath. This is an excellent opportunity to teach your older children about prioritizing, delayed gratification, give and take and winning and losing gracefully.

Make sure the area you select offers amenities that your building doesn’t have. If you don’t have a yard for the kids and the dog, make sure there’s a park and playground nearby.

Think about how far and how long it will take you to get to shopping, work, and other friends and family. Think about how a long commute will affect your family. Would you rather be sitting in traffic or attending your son’s ball game?

You and your spouse may want the prestige of living in a certain area, but if your house-payment is too high, you’ll introduce problems into the relationship you don’t need. It’s about making choices that make sense. Better to buy a smaller home in a great neighborhood and keep the arguing down.

Buy the best home you can that’s within your means and it will see you through years of comfort.

courtesy of:  http://realtytimes.com/consumeradvice/

Leased Solar Panels And Selling Your Home

Can going green by leasing solar panels for your roof cost you money — or give you headaches — when you go to sell the house?

Possibly both.

Say you get pitched by one of the growing number of companies offering solar panels at no upfront cost that they claim will save you lots of money on electricity bills. Sounds like a slam-dunk. So you sign on.

Then a few years later you decide to sell the house. You assume that the presence of solar panels can only be a marketing plus, maybe even get you a higher price. Everybody goes for green, right?

But that’s when it gets weird. Some would-be buyers balk when they learn that they’ll need to qualify on credit to take over your solar lease payments for the next 15 to 17 years. Others say they like the house but won’t sign a contract unless you buy out the remaining lease payment stream — $15,000 or $20,000 or more — because they’re worried that the solar equipment will become obsolete or won’t save as much on electricity bills as advertised.

Issues like these are popping up increasingly in California and other states and are interfering in sales and closings, according to real estate industry experts.

Consider what happened to Nora and Andrew Barber when they wanted to sell their home near Fresno. They needed to move because of an employment transfer to Thousand Oaks. Their house attracted offers quickly, but two successive sets of buyers backed out of contracts because of the leased solar panels on the roof. They either thought the long-term cost of the lease from Clean Power Finance was too high or got cold feet after hearing what credit qualifications they’d need to take over the lease.

Meanwhile, the Barbers were in the middle of negotiations to purchase their new house and making preparations to move.

“It was a nightmare,” Nora said. “We were in a panic” — pressured by the need to close the new purchase yet still dealing with unexpected complications caused by the leased panels. Finally, they paid $22,000 to get out of the lease and sold the house.

Steve Olszewski, senior vice president of operations for Clean Power, said that as a matter of policy, the company does not comment on cases involving its customers. He added that “we have seen very few instances” of home buyers “not wanting solar.” In 95% of cases, he said, buyers take over the solar agreement as-is or the home seller “pre-pays the agreement” or purchases the equipment outright.

Lynn Farris, a realty agent with Windermere Hulsey & Associates in Vacaville, Calif., says disputes arising over solar panel leases are “becoming an increasing problem” for sellers and buyers, and because of the rising popularity of solar, “it’s going to get worse.”

She has seen sales fall apart when the parties couldn’t agree on how to handle the substantial payments owed on long-term leases — in one case it was nearly $30,000 — or because buyers thought the leases “were really bad deals.” Out of four leased panel agreements she has analyzed, “only one was any good,” she said.

Nationwide, residential solar installations are booming — up by 50% per year since 2012, according to the Solar Energy Industries Assn. More than 600,000 homes and businesses now have on-site solar, with the fastest growth rates occurring in Maryland, Massachusetts and New York.

The biggest player in the field, SolarCity — backed by deep-pocket venture capital and chaired by Tesla Motors and SpaceX CEO Elon Musk — says it now has 190,000 customers in 16 states. Jonathan Bass, vice president of communications, says working out smooth transfers of leased systems from sellers to buyers — or buyouts of systems — is a priority. SolarCity has a 12-person team that already has arranged “close to 3,000” transfers, Bass said.

Takeaways from all this? Top of the list: Be aware of the potential complexities that can occur when you lease, rather than buy, solar panels.

If you opt for a lease, understand your long-term obligations, and talk to your current utility company about the savings claimed. Most important, if you’ve got a leased system and plan to sell, contact the leasing company well in advance to learn about the lease transfer and buyout options. That way you’ll be ready if prospective buyers have problems with your panels.

courtesy of:  http://www.latimes.com/business/realestate/

Nearly Half of Home Buyers Don’t Shop for a Mortgage

Americans may be spending more time shopping for shoes than for a mortgage, a report from the Consumer Financial Protection Bureau suggests. Almost half of consumers seeking a loan to purchase a home do not shop lenders, the agency said Tuesday.

A consumer taking out a 30-year mortgage for $200,000 and paying an interest rate of 4.5 percent will pay about $60 per month more than someone borrowing at 4 percent, and the borrower with the cheaper loan will also build equity faster, the report said …

The survey, conducted in 2014, also found that a majority of home buyers seek information on mortgage choices from sources that have a stake in their decision, like lenders and real estate brokers. Some 70 percent of the respondents said they used those sources heavily. Just 20 percent said they rely heavily on websites, despite the ready availability of mortgage-related information online. A paltry 2 percent seek a lot of information from housing counselors.

read more —>  http://www.cnbc.com/id/102330641

Fannie Mae, Freddie Mac – 3% Down Payment Mortgage Program

In an effort to open up lending to more low-income and first time home buyers, Fannie Mae and Freddie Mac announced Monday that they will start backing mortgages with down payments of as little as 3% of the home’s price.

But borrowers will still need to meet strict criteria first, the two government-backed mortgage giants said.

The new loans will only be doled out to those who buy private mortgage insurance, have a credit score of at least 620 and offer complete documentation of their income, assets and job status. And, to further mitigate risk, the agencies will require borrowers to receive home ownership counseling.

Both programs are for fixed-rate loans given to first time homebuyers and those seeking to refinance. Fannie will start backing the loans as soon as December 13, while Freddie will start offering them March 23.

courtesy of:  http://money.cnn.com/

FHFA Directs Fannie Mae and Freddie Mac to Change Requirement Relating to Sales of Existing REO

Washington, D.C. – The Federal Housing Finance Agency (FHFA) today directed Fannie Mae and Freddie Mac (the Enterprises) to alter one of their policies relating to the sale of real estate owned (REO) [bank owned due to foreclosure] properties in their current inventory.  The change will permit the two companies to sell existing REO properties to any qualified purchaser at the property’s fair-market value, as determined by the Enterprises.

Prior to today’s directive, the Enterprises required homeowners who have been through foreclosure and want to buy their home back to pay the entire amount owed on the mortgage.  This requirement similarly applied to anyone buying the home for the benefit of the previous homeowner.  Under the new policy change for existing REO properties, former homeowners who are able to repurchase their home – or a third-party able to purchase on their behalf – may do so under the fair-market value policy that already applies to other purchasers of REO properties.  

The policy change is limited to Fannie Mae and Freddie Mac REO inventory of single-family homes as of November 25, 2014.  Fannie Mae and Freddie Mac have approximately 121,000 properties in their combined REO inventory.  Certain property exclusions may apply and will be handled by the Enterprises on a case-by-case basis.

“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said FHFA Director Melvin L. Watt.  “It expands the number of potential buyers of REO properties and is consistent with the Enterprises’ practice of requiring fair-market value for those properties.”

Under existing Enterprise rules, former borrowers must wait a minimum of three years after a foreclosure to be eligible to receive a loan purchased or guaranteed by Fannie Mae or Freddie Mac.  The purchase of an REO property for the benefit of the previous owner must also still be intended for use by that owner as their principal place of residence. 

courtesy of:  http://www.fhfa.gov/

Nine Reasons To Buy A House Right Now

Buying a house is like having a baby: there’s no absolute perfect time to do either.

The down payment-interest rate-economic factors-qualification quadrangle can be so confusing. Rising rates, loosening requirements, down payment options, buyer’s markets, seller’s markets – what does it all mean to you if you want to buy a home? The truth is that while the banks might have a magical formula to determine your mortgage-worthiness, determining if the time is right really comes down to three main questions:

Do you want to buy a home?
Are you financially prepared?
Is your credit where it needs to be?

If yes, then go for it. Here are nine reasons to do it now.

1. Prices are good. According to the latest S&P/Case-Shiller report, home prices are still gaining, but have slowed. “The 10-City Composite gained 5.5% year-over-year and the 20-City 5.6%, both down from the 6.7% reported for July,” they said. “The National Index gained 5.1% annually in August compared to 5.6% in July.” This is good news if you were afraid that big price gains would put homeownership out of reach and also bodes well for your long-term equity once you purchase.

2. Rates are low. “Imagine paying over 18% interest on a 30-year fixed mortgage. It’s almost unthinkable. But that was the reality for home buyers in October 1981 — a year when the average rate was almost 17%,” said Yahoo Finance. “The average rate has been 5.18% since the start of this country’s history,” making today’s rates, which hover around historic lows at 4%, sound even better.

3. Loan requirements are softening. They’re not approaching the look-the-other-way-and-stamp-it-approved levels that led to the market crash, but the overly tough restrictions that followed have loosened. “Major lenders are making adjustments,” said The Street. “Wells Fargo has lowered the minimum FICO score for borrowers applying for loans insured by the Federal Housing Administration to 600 from 640.” They also count JPMorgan Chase’s lowered loan-to-value “standards in certain markets for both jumbos and conforming mortgages.” For buyers that can mean an easier road to loan approval, even without a ton of money upfront and perfect credit.

4. FHA loans make it even easier for first-time buyers. If your credit is less than stellar and you don’t have a large down payment, an FHA loan can get you in the door. Credit scores can be as low as 620 to qualify and only 3.5% down is required. Whether you’ve never bought before or have been out of the market for a few years, an FHA loan can be your answer.

5. Fewer buyers around the holidays means less competition for you and more negotiating power. “Sellers who are actively looking to sell their homes during the holiday months — namely, October through December — are serious about shedding the weight of their residences,” said US News. “This often works in favor of savvy buyers looking to get a deal on discounted homes. Having less competition on the buyer’s side can mean lower prices on homes, in addition to fewer counter-offers to compete against.”

6. Rates are predicted to rise. “The Mortgage Bankers Association expects the average rate on a 30-year, fixed rate mortgage to rise slowly to 5.1 percent by the end of 2015,” said the Washington Post. If you want to take advantage of low rates, now is the time.

7. Pent-up demand could zap affordability. “The housing market is about to get even more competitive,” said Yahoo. “The pent-up demand of younger professionals, who moved back in with their parents during the recession, is about to explode. This eager subset of buyers will create some steep competition for homes, especially if they have been saving up to make larger down payments or high ticket offers. If the current homes on the market have more potential buyers, bidding wars develop, and the purchase prices are driven up.

8. “Buying is cheaper than renting in most markets,” said Housingwire. With a little knowledge of loan options and low down payment programs, you can easily flip the switch from renter to homeowner.

9. Because you want to buy a home. There really is no more compelling reason than that. You want it. So make it happen.

courtesy of:  http://realtytimes.com/consumeradvice/buyersadvice1

2014 Survey – Typical CA Home Buyer

courtesy of:  http://www.car.org/marketdata

6 Things Homebuyers Should Avoid Doing Once They Are Preapproved for a Mortgage

You have done the hard part in the homebuying process and chosen a lender and a real estate agent to work with. You have also gone out and found the home of your dreams! Best of all, your team has done a great job of negotiating the best deal for you.

Now, as a buyer, all you have to do is sit back and wait for your loan to close … right? Wrong!!

Getting a home loan these days is a very interactive process. I am always amazed by how many clients I work with who come to me unaware of all the pitfalls they face during the loan process. To help avoid any surprises while waiting for final approval, I provide my clients with a short list of “do’s and don’ts” to follow.

Let’s start with the “do’s” …

1. Do keep the process moving by responding to your loan officers’ requests for documentation as soon as possible.
2. Do make decisions as soon as is reasonably possible.
3. Do convey questions or concerns you have as they develop.
4. Do continue to make all of your rent or mortgage payments on time.
5. Do stay current on all other existing accounts.
6. Do continue to work your normal work schedule with no unplanned time off.
7. Do continue to use your credit as normal.
8. Do be prepared to explain any large deposits in your bank accounts.
9. Do enjoy purchasing your home but remain objective throughout the process to help make decisions that are best for you.

After you have been preapproved for your mortgage you will want to refrain from the following …

1. Do not make any major purchases (car, boat, jewelry, furniture, appliances, etc.).
2. Do not apply for any new credit (even if it says you are preapproved or “xxx days same as cash”).
3. Do not pay off charges or collections (unless directed by your loan officer to do so).
4. Do not make any changes to your credit profile.
5. Do not change bank accounts.
6. Do not make unusual deposits into your bank accounts or move money around from one account to another.

Follow these simple rules and you will help to make your loan closing as smooth and hassle-free as possible! Good luck!

courtesy of:  http://www.inman.com/next/the-dos-and-donts-of-the-home-loan-closing-process/

7 Negotiation Tips For The Home Buyers

Buying a home is an important decision in your life. It’s considered to be one of the biggest investments a person makes. If you are planning to buy a house, you need to consider many things. It’s important to negotiate fairly with the seller and get a good deal. There are many key negotiation tips will help you to get the best house at the best price. Below are some of them:

1. Respond faster

Buyers need to be quick in their response. They cannot keep the sellers waiting for a long period. If you wish to buy a house, you need to respond quickly to the counteroffer. If you don’t, the seller may find another buyer, which may cause a bidding war. The seller may also start neglecting you and contact other buyers. It’s important to respond faster or repent later on. If bidding starts, then on the fair price you could have had may be lost. Don’t let this happen. Respond immediately and act fast.

2. Do your homework

Buyers should do their homework before finalizing any deal with the seller. It’s critical to put in this effort when it comes to buying a home. There are hundreds of options available online, buyers can explore them and get to know the home prices in their areas. A detailed study of the income levels, school system, demographics and property tax rate will help in negotiation. Thus, homebuyers should do their proper research before sealing any deal with the seller.

3. Don’t show your eagerness

As a buyer, you may be longing to buy a home and may also have a fixed timeline. You should never show your eagerness to the seller though. If the seller knows about your eagerness, he may raise the price and may not negotiate further. He understands your need and can even take advantage of it. Thus, you need to make sure that you don’t let the seller know about your problems. Even if a realtor is involved in your transaction, make sure you tell him or her not to disclose the information.

4. Connect with your seller

If you are planning to buy a house, it’s important for you to connect with your seller. When you connect with the seller, communicate with him and tell him all the details you like about the house, it builds a connection between you. It’s good to connect with the seller and build relations with him in context to your future home.

5. Ask questions and clear up your doubts

As a buyer, you should never pretend everything is fine. Be clear, ask questions and clear up doubts. An efficient negotiator is not afraid because he or she asks questions. You are that negotiator when it comes to your choice of home. Don’t keep yourself from clarifying a concern. That concern could cause problems in the future.

6. Prioritize your needs

As a buyer, you should prioritize your needs while negotiating with your seller. You need to figure out what you want most and put it forward accordingly. For example, decide whether you want a lower price or the seller to make repairs. Prioritize your needs and act accordingly. If you have done this, you can smoothly negotiate with the seller.

7. Document the deal

Never assume anything, as assumptions always create confusion. You, as a buyer, should make sure to document the deal, get it in writing. If the seller tells you that he will provide the dishwasher and the washing machine, get it in writing. Even the small details should be documented. This will keep troubles from being created later on.

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courtesy of:  http://www.propertycluster.com/

Mortgage Rates Drop – Mortgage Standards Expand To Include Lower Credit Scores

May 19, 2014

Mortgage lenders are lowering mortgage credit standards nationwide.

Effective immediately, home buyers and refinancing households can get approved for an FHA loan or a conventional loan with lower credit scores than during any time in the last five years.

Combined with mortgage rates today, which are at an 11-month low, it’s an excellent time to apply for mortgage.

Mortgage Credit Score Minimums Drop

It’s getting easier for borrowers to get approved for a mortgage. As the economy has improved, jobs growth has been ongoing; home values have climbed steadily; and the number of loans in default have dropped dramatically.

Lenders are taking fewer losses and realizing bigger returns. In response, they’re loosening loan guidelines in an effort to reach consumers who have been thus far locked out from the housing market rebound.

Earlier this year, U.S. lenders lowered minimum credit score requirements by 40 points for borrowers using FHA-backed financing, opening the low-downpayment program to a wide swath of underserved borrowers.

Lenders are making a similar move for conventional loans.

Lowering credit standards is a big deal in the U.S. housing market. Credit scores predict the probability of foreclosure with lower credit score correlating to high foreclosure probability.

During last decade’s housing market downturn, homes in foreclosure cost banks hundreds of millions of dollars. As more loans went bad, banks grew more risk-averse, tightening up what they would lend, and to whom.

This month’s loosening of loan standards suggests that fewer loans are defaulting nationwide, and that banks are willing to assume new risk given today’s strengthening economy.

For today’s buyers of homes and households wanting to refinance, this is good news.

You no longer need “perfect” credit to get access to Fannie Mae- and Freddie Mac-backed mortgages. A 620 FICO score now works just fine.

The Mortgage Approval “Triangle”

Because there are tens of available mortgage programs, there is no “one” formula for getting approved for a mortgage. However, mortgage approvals almost always focus on three key areas — your income, your equity, and your credit.

In this three-pronged approach, “income” is the amount of documented income you earn annually as compared to your monthly debts. In general, your debts must not exceed 45% of your documented income.

This ratio is known as your debt-to-income (DTI) ratio.

“Equity” is the amount of equity, in percentage terms, you hold in the home you’re mortgaging. For a home buyer, your equity is equal to your downpayment. For a refinancing mortgage applicant, your equity is your loan size divided by the home’s value, a ratio known as Loan-to-Value (LTV).

Loan-to-value requirements vary by program. For example, for borrowers with a FHA-backed loan, the maximum LTV on a home purchase transaction is 96.5%. On an FHA refinance, however, there are no LTV restrictions at all.

Or, for a military borrower using a VA loan for a purchase, the maximum LTV is 100%; there is no downpayment required whatsoever.

The third prong in mortgage underwriting is “credit”.

Your credit score is a based on a formula which determine the likelihood that you’ll go 90 days without making payment to your lender, which puts your loan into default. Credit scores are on a scale of 300-850 and are sometimes referred to as “FICO” scores, generically.

Credit scores of 740 or higher are considered excellent.

To get a mortgage approval, it’s not required for applicants be “excellent” in all three prongs of the mortgage approval triangle — you must only earn a “passing” grade.

With credit standards dropping, it’s easier for today’s borrowers to get approved.

Loan Programs For Borrowers With Average Credit Score

Mortgage lenders are loosening home loan standards. They’re lowering minimum credit score standards and granting more “exceptions” as compared to last decade.

If you were recently turned down for a mortgage because your credit score or income, it might make sense to re-apply — especially because of the number of home loans now available to borrowers with less-than-perfect credit scores.

One such program is the USDA Rural Housing Loan, which allows 100% financing for home buyers in rural and suburban neighborhoods. The USDA loan backed by the federal government, is available in all 50 states, and requires a minimum FICO score of 620.

Another available program is the VA loan, which also enforces a minimum FICO score of 620. VA loans are available to members of the military and require no downpayment whatsoever.

VA loans require no mortgage insurance and can be assumed by the future buyer of your home. This means that your 3.75% mortgage rate can be “sold” along with your home, so long as the buyer can be VA loan-approved.

Assumable loans add value to a home in a rising mortgage rate environment.

A third program for borrowers with less-than-perfect credit scores is the FHA home loan. Official FHA guidelines state that a 500 FICO score is required to get approved, but many lenders will underwrite to a minimum 580 FICO or better.

FHA loans are assumable, as well.

Low-credit-score borrowers can also use conventional mortgage financing. Conventional loans are loans which are backed by Fannie Mae or Freddie Mac.

Conventional loans are available with credit scores of 620 or higher, and can be the best choice for buyers with downpayments of 10% or more; or for refinancing homeowners with home equity of at least twenty percent.

Additionally, Fannie Mae or Freddie Mac can access the Home Affordable Refinance Program (HARP) program. Sometimes called the “Obama Refi”, HARP loans are for homeowners whose homes have lost equity since the date of purchase.

HARP is allowed with a 620 FICO score or better.

Get Today’s Live Mortgage Rates

As mortgage rates move to an 11-month low, mortgage lenders have opened their loan guidelines to a wider group of applicants. If you’ve been turned down for a mortgage in the recent past, consider applying again.

courtesy of:  http://themortgagereports.com/14951/mortgage-rates-fico-score-credit

10 Countries Racing to Buy American Homes

International homebuyers are attracted to the United States for a number of reasons. These include favorable housing prices, good weather, the country’s relative economic stability and an attraction to America in general. As the housing market improved and home prices rebounded, the interest of foreign buyers in U.S. properties has soared.

Interest in U.S. property increased dramatically in a number of countries between 2009 and 2013. In all, interest in home buying, according to housing market firm RealtyTrac, increased by 95% or more in 10 countries, and at least doubled in nine of these nations. Interest in U.S. property by residents of the United Arab Emirates rose 352%, the most out of any country. Based on subscription data provided by RealtyTrac, these are the 10 countries where interest in buying American homes is on the rise.  (read more —> http://www.usatoday.com/story/money/business/2014/04/12/countries-buying-american-homes/7586991/ )

courtesy of:  http://www.usatoday.com/

Mortgage Lenders Begin Easing Rules for Home Buyers

As a sign of mortgage lenders’ rising confidence in the housing market, restrictive lending standards are beginning to ease, and the credit freeze is starting to thaw. Lenders have started to accept lower credit scores and to reduce down-payment requirements.

Making sense of the story

• Lenders recognize that refinancing old mortgages will no longer be a huge profit center for banks, so competing for borrowers will be needed for business and future profits. As a result, lenders will have to open up to borrowers who may not have perfect credit or large down payments.

• For example, the lender TD Bank began accepting down payments as low as 3 percent through an initiative called “Right Step” for first-time buyers. A year ago, the program required at least a 5 percent down payment.

• Mortgage originations are expected to reach $1.1 trillion this year, which is down from $1.8 trillion last year and $2 trillion in 2012 due to less refinancing.

• While private lenders have shied away from low-down-payment mortgages in the past few years, in the past year, more than one in six loans made outside of the FHA included down payments of less than 10 percent.

• Credit scores for borrowers seeking conventional mortgages also are easing, as scores on purchase mortgages stood at 755 in March, down from 761 a year earlier.

• Smaller lenders are trying to appeal to first-time buyers while many larger lenders are gradually reducing down payments for jumbo loans in order to attract wealthy customers.

courtesy of:  http://online.wsj.com/

Fannie Mae Announces Homebuyer Incentive up to 3.5% Closing Cost Assistance on HomePath Properties

Fannie Mae (FNMA/OTC) announced today that homebuyers may receive up to 3.5 percent in closing cost assistance when they purchase a HomePath^® property in 27 states during the FirstLook^TM period. During the FirstLook period, owner-occupant or public entity buyers are able to submit offers on HomePath properties, giving them the opportunity to purchase homes without competition from investors. Fannie Mae recently announced the extension of the FirstLook period from fifteen days to twenty days.

“This incentive will provide more opportunities for families to find a property to call home,” said Jay Ryan, Vice President of REO Sales.  “Our goal is to sell as many HomePath properties as possible to owner-occupants who will stabilize neighborhoods and help the housing recovery.”

To be eligible for the incentive, the initial offer must be submitted between February 14, 2014 and March 31, 2014, and close on or before May 31, 2014. The incentive will offer qualified buyers up to 3.5 percent of the final sales price to pay closing costs. In many cases, buyers could use these savings to buy down their interest rate through upfront points, resulting in additional savings over time. Buyers can work with the lender of their choice to determine if this is an option.

Prospective buyers can search for properties and easily identify how many days remain on a property’s FirstLook period by visiting www.HomePath.com. Each qualifying property will be identified by the sales incentive icon. HomePath properties offer buyers a wide selection of options, including single-family homes, condominiums, and town houses. For more details on the program, visit www.HomePath.com.

courtesy of:  http://www.fanniemae.com/

Sellers – Do You Have the Home That Buyers Want?

Knowing what appeals to today’s homebuyers, and considering those trends when you remodel, can pay off years from now when you sell your home …

Privacy from neighbors remains at the top of the most-wanted list (important to 86% of buyers), according to the NATIONAL ASSOCIATION OF REALTORS’® “2013 Community Preference Survey.” Privacy is no doubt the best feature of my mid-century ranch home, since I can only see one neighbor’s house and it’s a couple hundred feet down my driveway.

It may not be practical to move your neighbors farther away (although I’m sure many people wish they had that superpower), but you can increase your home’s privacy (and therefore its resale value) by planting a living privacy screen of trees and shrubs or by physically screening off your patio.

3 More Takeaways for the Next Time You Remodel

1. More and more generations are living together. Another NAR survey, the “2013 Profile of Home Buyers and Sellers,” found 14% of buyers purchased a home suited to a multigenerational household due to children over the age of 18 moving back into the house, cost savings, and the health and caretaking of aging parents …

Even if you’d rather live in a cardboard box than with your mother, you might want to consider the multigenerational living trend when you’re remodeling. For instance, opting for a full bath when finishing the basement could offer more convenience for you now and boost your home’s resale value by making it more appealing to a multigenerational family.

2.  On average, homeowners live in their home for nine years. That’s up from six years in 2007. Since you’ll be in your home for a long time, it makes sense to remodel to suit your taste but also with long-lasting marketability in mind. After all, you don’t want to have to redo stuff. For instance, you can go for trend-defying kitchen features, like white overtones and Shaker-style cabinets, which work with a variety of styles …

3.  Homebuyers love energy efficiency. Heating and cooling costs were “somewhat” or “very important” to a whopping 85% of buyers. If your home could use an energy-efficiency upgrade, go with projects that have a solid return on investment, like sealing your air leaks and adding attic insulation. You’ll save money on your utility bills now and when you’re ready to sell, your home will appeal to buyers looking for efficiency.

By the way, to take back your energy bills, you need to do at least four things. One to two fixes won’t cut it, thanks to rising energy costs.

About two-thirds of survey respondents also thought energy-efficient appliances and energy-efficient lighting were important. Tuck away your manuals and energy-efficiency information when you buy new appliances and lighting. When you’re ready to sell (in nine years) you can pull those out and display them where buyers will see them.

courtesy of:  http://members.houselogic.com

Many Home Buyers Plan to Make a Move This Winter

Home buyers who weren’t successful this summer at finding a home due to limited inventories and competition from all-cash offers are looking to retry their luck in the winter, according to realtor.com®’s Winter Home Buyer Report.

“This summer and spring, home-buying season was particularly challenging for buyers, especially first-time home buyers trying to compete with all-cash offers and bidding wars because of reduced inventory,” says Alison Schwartz, vice president of corporate communications at realtor.com®. “In fact, a quarter of the winter home buyers revealed they are in the market now because they were unable to find a home during this last home-buying season.”

But winter home buyers know they’ll face some challenges. Forty-five percent of those surveyed say they believe they will be up against inventory challenges again, with few homes for sale within the price range they desire. Twenty-nine percent also say that winter weather makes house-hunting unpleasant.

But they believe that the winter can be a good time to buy a home. Twenty-six percent say winter is a good time to buy because they feel sellers will be more motivated and willing to negotiate. Twenty-four percent also say they think home prices will be better.

Of those looking to buy this winter, 23 percent are planning to make a down payment of 10 to 20 percent, according to the realtor.com® survey. Twenty-two percent are planning to put down 21 to 99 percent in cash; 19 percent plan to put down 100 percent cash; and 13 percent are planning to make a down payment of 3.5 percent to qualify for a Federal Housing Administration loan.

courtesy of:  http://realtormag.realtor.org/

Easily Transform Your Yard Into a Great Outdoor Sanctuary

Adding life to outdoor spaces will help sell the lifestyle of a home. Here are staging tips to help buyers imagine gathering spaces, tranquil hideaways, or entertainment coves that are possible with your listing.

 Fold up the lawn chairs, roll away the rusty grill, and hide the tiki torches.  Inviting, sophisticated outdoor rooms are in high demand among home buyers, and they serve as a way to extend your listing’s living space.

“Outdoor living spaces have become the new ‘great room’ in terms of must-have items for home owners,” American Institute of Architects Chief Economist Kermit Baker noted in a survey on the growing popularity of these spaces. Renters say it’s even a reason to leap into home ownership. Sixty-three percent of young adult renters aged 18 to 34 say outdoor living spaces and decks are “extremely” or “very important” in deciding which home to buy, according to the PulteGroup Home Index Survey.

Have you stretched your curb appeal beyond well-manicured yards to create outdoor spaces, using your front porch, deck, or even the lawn?

“You can blow the competition out of the water by creating outdoor spaces with a fabulous garden dining area, lounge seating areas with a fire pit, and if you have it, a relaxing hot tub scene,” says stager Lena A. Pereira with Westside Staging Solutions. “Way too often backyards are boring and not brought to their full potential. You can make a home stand out by showing buyers all the potential your property has to offer inside and out.”

Read more at:  http://realtormag.realtor.org/home-and-design/feature/article/2013/10/transform-yard-outdoor-sanctuary

Tips For Pricing Your Home To Sell

• Consider comparables. What have other homes in your neighborhood sold for recently? How do they compare to yours in terms of size, upkeep, and amenities?
• Consider competition. How many other houses are for sale in your area? Are you competing against new homes?
• Consider your contingencies. Do you have special concerns that would affect the price you’ll receive? For example, do you want to be able to move in four months?
• Get an appraisal. For a few hundred dollars, a qualified appraiser can give you an estimate of your home’s value. Be sure to ask for a market-value appraisal. To locate appraisers in your area, contact The Appraisal Institute or ask your REALTOR® for some recommendations.
• Ask a lender. Since most buyers will need a mortgage, it’s important that a home’s sale price be in line with a lender’s estimate of its value.
• Be accurate. Studies show that homes priced more than 3 percent over the correct price take longer to sell.
• Know what you’ll take. It’s critical to know what price you’ll accept before beginning a negotiation with a buyer.

courtesy of:  realtor.org

5 Things to do Before Putting Your Home on the Market

1. Have a pre-sale home inspection. Be proactive by arranging for a pre-sale home inspection. An inspector will be able to give you a good indication of the trouble areas that will stand out to potential buyers, and you’ll be able to make repairs before open houses begin.

2. Organize and clean. Pare down clutter and pack up your least-used items, such as large blenders and other kitchen tools, out-of-season clothes, toys, and exercise equipment. Store items off-site or in boxes neatly arranged in the garage or basement. Clean the windows, carpets, walls, lighting fixtures, and baseboards to make the house shine.

3. Get replacement estimates. Do you have big-ticket items that are worn our or will need to be replaced soon, such your roof or carpeting? Get estimates on how much it would cost to replace them, even if you don’t plan to do it yourself. The figures will help buyers determine if they can afford the home, and will be handy when negotiations begin.

4. Find your warranties. Gather up the warranties, guarantees, and user manuals for the furnace, washer and dryer, dishwasher, and any other items that will remain with the house.

5. Spruce up the curb appeal. Pretend you’re a buyer and stand outside of your home. As you approach the front door, what is your impression of the property? Do the lawn and bushes look neatly manicured? Is the address clearly visible? Are pretty flowers or plants framing the entrance? Is the walkway free from cracks and impediments?

courtesy of:  realtor.org

How Your Credit Score Can Affect Your Mortgage Payment

When my wife and I bought our first home (circa 1993), we had no idea what our FICO score was. Back in the day, you couldn’t simply fire up the computer and check your score. In fact, we applied for our mortgage over the phone, not over the Internet. My, how things have changed!

But one thing hasn’t changed—the importance of a good FICO score when it comes to getting a mortgage. Not only will a good score help you qualify for a home loan, but it will also help you get the lowest rate possible. If you plan on taking out a mortgage—which almost all homebuyers do—understanding how your credit score affects your mortgage rate can mean saving thousands of dollars over the life of the loan.

[In Pictures: 10 Smart Ways to Improve Your Budget.]

When you take out a home loan, you of course have to pay interest on the money that you are borrowing. The amount of interest you pay on a fixed rate fully amortizing loan is a function of three things: 1) the amount you borrow; 2) the term of the loan; and 3) the interest rate, which is expressed as a percentage. The mortgage rate you receive depends heavily on your credit score. For this reason, let’s get a basic understanding of your credit score.

Each of the three major credit bureaus (Equifax, Experian, and TransUnion) collect information on you about your practices of borrowing and paying back credit. This is compiled into a credit report, from which a credit score is calculated. While there are multiple formulas for calculating credit scores, the formulas introduced by the Fair Isaac Corporation are the most widely used. When you hear the term FICO score, know that FICO is short for Fair Isaac Corporation. All these scores can be a bit confusing, so it might be useful just to think of “credit score” as a numeric grade of your credit history.

Lenders consider many factors like employment, salary, savings, and debt-to-income ratio when they determine your mortgage rate. However, your credit score is a key indicator of the rate you will likely receive. Fair Isaac Corporation looked at thousands of financial lenders to come up with the mortgage rates provided to borrowers given their credit score. Let’s look at the credit rates for people with three different credit scores:

• Credit score of 620:  6.2 percent

• Credit score of 700:  4.8 percent

• Credit score of 780:  4.6 percent

Clearly, your credit score significantly impacts your mortgage rate. But let’s apply these scores to a real scenario to see how much a good credit score can save you and how much a bad credit score can cost you. Let’s say you are looking at a $250,000, 30-year fixed mortgage. If you have a credit score of 620, you are considered a riskier, subprime borrower. You will be making a monthly payment of principal and interest of $1,527, which amounts to $299,821 of total interest paid over thirty years.

If you have a better credit score of 700, you are considered a less risky, good borrower. You can expect to pay $1,313 monthly for a total of $222,689. If you have an extremely favorable credit score of 780, you fall into the top-tier range of borrowers, and lenders will very likely offer you a lower mortgage rate along with more loan choices. Your monthly payment will be $1,280 for a total of $210,681.

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

As you can see, having a score of 780 instead of 700 does not make much of a difference in your mortgage payment. Over thirty years, the difference is about $12,000. However, having a credit score as low as 620 can cost you dearly. You will pay hundreds of dollars more each month and tens of thousands of dollars more over the lifetime of the loan. If you can improve your score, you can save tons of money. Specifically, if you raised your score from 620 to 700, you could save an extra $77,133. If you raised it even higher to 780, you could save $89,140.

Building a great credit score is extremely important to obtaining a good mortgage rate and saving boatloads of cash. Also, remember that although credit scores can reach as high as 850, you don’t need to worry too much about obtaining a perfect credit score.  Fair Isaac Corporation suggests that lenders don’t differentiate much between someone having a score of 720 and someone having a score of 820. Once you reach that score of 720, you will likely receive the lowest mortgage rates available. Start small, improve your FICO score, and bask in the mortgage savings that you earned.

Courtesy of:   money.usnews.com

NINE WAYS A BUYER CAN ACCIDENTALLY DISQUALIFY THEIR LOAN BEFORE CLOSING

In today’s more scrutinized lending industry, individuals working to buy a home may disqualify their loans before actually closing escrow. There are a number of actions loan applicants can make after first applying that may cause their loan to be denied. However, with education and coaching before or during the loan process, buyers can avoid such denials.

Underwriters advise that too many applicants take on additional debt while their original loan is still being processed. Buyers who purchase a new car or furniture on credit, change jobs, or co-sign on a debt for someone may disqualify their loan.

“Disqualifying loans during the process is actually happening a lot,” says Michael Deery, mortgage specialist and mortgage broker with Citywide Financial Corp.

Deery notes there are nine common mistakes buyers make to disqualify their loan. He offers the following advice:

1. Don’t co-sign on any debt with anyone.

2. Don’t quit your job to change industries or start a new company.

3. Don’t switch from a salaried job to a heavily commissioned job.

4. Don’t buy a new car or trade up to a bigger lease.

5. Don’t forget to pay your bills — even the ones in dispute.

6. Don’t open new credit cards — even if you’re getting 20 percent off.

7. Don’t accept a cash gift without filing the proper “gift” paperwork.

8. Don’t make random, undocumented deposits into your bank account.

9. Don’t transfer large sums of money between bank accounts.

“I like to warn buyers of an important rule: Lenders will pull your credit again before closing,” says Deery.

Existing rules require lenders to re-pull a buyer’s credit report just prior to closing to look for any changes. If this final report doesn’t match the original credit report, the mortgage may be subject to a complete re-underwrite or, in a worst-case scenario, the loan can be denied ….  (read more —>)