How Do I Get My Down Payment To Buy A Home?

Hello Everyone,
          Sorry for the long break.  Many of my clients have been having concerns about coming up with their down payment to buy their new home.  I came across a list of tips I would like to share with you from Trulia, one of the web's top home listing websites, to help with just this...

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Impact of Our Economy on Buyers – Especially First Timers

For a long time now, most people have been worried about the economy and how it will effect them.  The unemployment rate is rising and so are the number of foreclosures.  The worry of job security and tightening of credit standards have kept many buyers out of the market.  Most buyers still in the market are looking for homes lower in price than before, and this is causing the average sale price of homes to be lower across the board.  On top of this, more homes selling at foreclosure prices will eventually bring the rest of home prices down.  Out of the buyers who are left, some sit back for the prices to drop lower.  This causes bumps in the road as the market trys to stabalize.  The truth is that the ones that wait too long are going to miss the opportunities that exsist now.  While prices of homes are still low and interest rates have now dropped this week again, too many buyers are not taking advantage of this.  Read here where New Orleans City Business reported this week, "Average Rate on 15 Yr Mortgage Dips Below 4%".  This article reports that the average 15yr fixed mortgage dropped to 3.97% while the average 30yr fixed mortgage fell to 4.88%.  The yield on U.S. Treasury bonds fell due to worries that the crisis in Japan could slow economic growth, which the rates followed.

What every first time home buyer should know

So what should the first time homebuyer do?  Be prepared!  Education and planning is the key and remember to get help.  Consult your Realtor for advice even if you don't believe you are ready to buy yet.  Here are Do's and Don'ts to follow:

Do:

Save your money now while you are planning.  Save money now and don't wait.  Most first time homebuyers are using FHA loans becasue they only need a 3.5% downpayment, but also remember you will also need money for closing costs and pre-paid items such as homeowner's insurance. 

Gather a team you trust.  Assemble a professional team to get you through the technicalities of home buying.  Start with finding a Realtor. Interview this person to make sure they are knowledgable and that you feel comfortable with them.  Then your Realtor can help you to continue to build your team to include a mortgage specialist and then later a home inspector and title company.  Ask around for referrals and meet with them in advance so that you are comfortable relying on their advice when you need it most.

Know what you can afford.  Only you with the help of your Realtor and lender can properly determine what you can afford.  Mortgage standards are still constantly changing and your bank or mortgage company of choice can help you keep up with the most recent requirements.  They will also run your credit report.  A good mortgage specialist will not only let you know if your credit is up to standards, but also give you suggestions to get you ready if it is not.  You want a credit score minimum of 640, but the higher the better.

Choose the right option for you.  After you know what you can afford, narrow down your search by figuring out what type of home suits you best.  Ask yourself questions such as do you want: a house or a condo?  A new home or older home?  Is more square footage worth a longer commute?  Are you looking to renovate or move right in?  In the city or a smaller community?  You may also want to drive around in the towns your are considering to find the neighborhoods you like and will feel comfortable in.


Don’t:

Skip the home inspection. You may know a handy guy, but the best way to see if your dream home will turn into a nightmare is by having, before you purchase your home, a home inspector identify any potential problems and determine whether or not any upgrades need to be made.

Buy more than you need.  Even if you can afford a more expensive home, choosing one that you love at a lower price point allows you to keep some breathing room in your budget. A fourth bedroom that you never use is just another room to clean and heat!


 
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NOLA Westbank Housing Market Stats 2010 vs 2009 - How Did We Start 2011 ?

On the Westbank, we started January 2011 with similar number of listings on the market as January of 2009 & 2010.  Number of Sales, for the month of January, are slightly higher with 84 solds in 2011 compared to 77solds in 2009 and 74 in 2010.  Sellers appear to becoming more realistic in asking price with the overall average listing price in January 2009 at $196,247 to $188,174 in January 2010 until now in January 2011 at $169,366. 

Although, the average listing price of the homes that actually sold were still much lower as the chart below shows comparison of January 2009, 2010 and 2011:

(Click on any chart below to enlarge)

This table below compares statistic totals for all of 2009 to 2010 for Single Residential Homes on the Westbank:

This chart above shows in % the following:

• Only ↑ 1.5% # Listings in 2010 over 2009
• Average Listing Price of All Listings ↓ 9.3% 2010 over 2009
• # Sales ↓ 8.6% 2010 over 2009
• Average Listing Price of Sold Listings ↓ 5.9% 2010 over 2009
• Average Actual Sold Price↓ 6.2% 2010 over 2009
• DOM (Days on Market) ↓ 7.4% 2010 over 2009

The overall inventory of homes on the market, measured in number of months, were very similar in 2010 @15 months to 2009 @ 14 months.

The following charts show the month to month comparisons of statisitcs for Single Residential Home Listings and Sales on the Westbank:

 

 

 

 

 

Overall, it appears buyers are continuing to be very cautious, and spending at an average less on a home than in the past.  Therefore, the lower priced homes are selling the fastest and overpriced homes don't have a very good chance of selling...  although, the market still continues to stablize.  It is predicted by many experts that an abundance of foreclosures are going to be dropped into the market later this year and that another wave of mortgage tightening in on it's way.  If this is the case, and you have been waiting for the right time to sell a home, now is the time to do so.

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Why Is It Important For Buyers To Get Pre-Approved First?/ Common First Time Homebuyer Mistakes

Buyers often wonder WHY they need to get pre-approved for a home loan and here are my top four reasons:

1. Not all Buyers qualify for a home loan, or they may be approved for a much smaller amount than anticipated.   I've had clients come to me and say I can afford X amount a month and according to the mortgage calculator online I can spend X amount on my purchase. Unfortunately what you can afford and what your lender will loan you are two different stories.

2. To make sure you how much home you can afford.   When getting pre-approved by a lender they will not only go over which loan programs you qualify for, but they will also give you an estimated monthly mortgage payment and closing costs based on your approved loan amount. With this information you can then decide how much of a home you can afford.

3. The Seller wants to see proof.   A majority of sellers in today's real estate market won't even entertain offers that are not accompanied by a Pre-Approval Letter or, if paying cash, Proof of Funds. By providing a pre-approval letter with your offer the seller will know you are not only a serious buyer, but a ready, willing and able one.

4. You need to know the terms of your offer.   When writing an offer you must know the terms you will be offering; the loan program you are choosing, how fast you or your lender can close along with whether or not you need/want seller contributions. Say your estimate for closing costs is around $10,000, but after your down payment you only have $3,000 left to spare. That means you will need to ask the seller to contribute $7,000 towards your closing costs in order to have enough to purchase their home. Seller contributions are not negotiated after you are under contract on a home, this is done during negotiations.


Looking at homes prior to getting pre-approved for a home loan is like putting "the cart before the horse." There are several steps to the home buying process and this is why you need to have a good Realtor.  When you need assistance, Give me a Call...

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Foreclosure Resource Guide - Buying A Home Again After A Foreclosure?

Last week we discussed how foreclosures are still on the rise, the affects on the community and how a Short Sale can be an alternative for a homeowner.  But what about those who have been through a Foreclosure?   When can they buy a home again?


Your credit score will take a major hit after a foreclosure, but there are guidelines to follow when you're ready to be a homeowner again.  If credit is reestablished after the foreclosure, and depending on the type of loan you will use to buy your next home, it can take between 3 - 7 years to be accepted for a home loan.  In the link below, you will find a chart which will outline the present standards set by FHA, Freddie Mac and Fannie Mae for the wait time on these loan types for those who have gone through Foreclosure, a Short Sale, or Bankruptcy.  With discipline and perseverance, you can again be in a position to obtain a home loan. The next link below will give you a 5 step guideline on how to reestablish your credit and become a homeowner again.

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  (New!)

  When is Foreclosure Removed from Your Credit Report?

  Use this handy guide to figure out how quickly you can buy a home after a major financial setback when applying for a loan through FHA, Fannie Mae, or Freddie Mac. Read
• 

  5 Steps to Owning a Home Again After Foreclosure

  Foreclosure is just a one-time event—with discipline and perseverance, you can get a mortgage and become a homeowner again. Read

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Handling the Foreclosure Crisis

Foreclosures are still on the rise. On January 13, 2011 City Business reported that the New Orleans area had the 95th highest foreclosure rate in 2010 among 203 markets tracked nationwide. Foreclosure activity was up 36.25 percent over 2009 in the area comprised of Jefferson, Orleans, Plaquemines, St. Bernard, St. Charles, St. James, St. John and St. Tammany parishes. There were 7,822 filings for a foreclosure rate of one in every 57 housing units.

If you or someone you care about are one of the many homeowners worried about this happening to you, are you asking yourself, "Where do I turn for help?"  First let me say that there is nothing to be embarrassed about and there are many other people in your position.  You need to seek help now before the problem gets worse.  Most people are afraid to turn to their local Realtor because they think they will have to pay money out of pocket that they don't have.  What they don't realize is that an experienced Realtor in the area of Short Sales and Foreclosure can actually help them, and most of the time without the homeowner spending any extra money.  You can talk to your Realtor to find out if a Loan modification is best for you, or if selling your home would be best.  They can show you what questions to ask your Mortgage Company, or in some cases with your authorization, talk to them for you.

Maybe you are not the one facing foreclosure but worried because it is happening all around you.  Below are several links to more resources to guide you.  This will explain more on how to talk to your Mortgage Company, what a short sale is and how this may help you.  If you are a homeowner in a neighborhood with foreclosures, you may want to read up on how this will effect you. 

Our next Blog will be the next Chapter on Foreclosures to continue this Foreclosure Resource Guide.  So please tune in...

• 

  Foreclosure Alternative: The Short Sale

  A short sale is far from hassle-free, but it’s a better alternative than foreclosure. And now you’ve got a little help from your friends in D.C. Here are the facts about short sales and how to get started. Read
• 

  How the Foreclosure Crisis Costs You Money

  Foreclosure may seem like someone else’s problem, but when it happens in your neighborhood, it’s going to cost you money, too. Read
• 

  How to Talk to Your Lender About Foreclosure

  When facing foreclosure, the first step is to get in touch with your lender to discover your options. Read

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FIRST TIME HOMEBUYER INCENTIVES & 7 STEPS FOR HOMEBUYING

7 Steps to Take Before You Buy a Home 

First Time Homebuyers are often a little worried about getting started in the process of buying a home and don't know what to do first.  Below are 7 steps that most experts would agree on, and having a Realtor you trust to walk you through these steps is proven to be very helpful.  By doing your homework before you buy, you’ll feel more content about your new home.  Having a good Realtor on your side looking out for you can be an important key- but for a first time homebuyer...  Priceless
 

1. Decide how much home you can afford
Generally, you can afford a home priced 2 to 3 times your gross income. Remember to consider the necessary homeowner costs which must be covered: property taxes, insurance, maintenance, utilities, and community association fees, if applicable.


2. Develop your home wish list
Be honest about which features you must have and which you’d like to have.  Remember, this is your first home, and you may be able to work up to those like to haves the next time, but you need to be able to make payments on this one first.

3. Select where you want to live

Drive through the neighborhoods you think you may be interested in.  You may want to make a list of your top-five community priorities, such as commute time, schools, and recreational facilities.

4. Start saving
Have you saved enough money to qualify for a mortgage and cover your downpayment?  Even though ideally you should have 20% of the purchase price set aside for a downpayment, an FHA loan only requires 3.5% downpayment which can be a lot easier for a first time homebuyer to obtain.  A small downpayment preserves your savings for emergencies and you will still need to consider closing costs.

But Remember...   The lower your downpayment, the higher the loan amount you’ll need to qualify for, and the higher your monthly payment.

5. Ask about all the costs before you sign

A downpayment is just one homebuying cost. Your REALTOR® can tell you what other costs buyers commonly pay in your area—including home inspections, title and attorneys’ fees. Keep in mind the extras you’ll also want to buy after you move-in, such as window coverings and new furniture but don't buy these until you are closed on your new home.

 6. Get your credit in order

Your REALTOR® can help suggest several mortgage representatives to find out how your credit stands and you can pick the one you feel most comfortable with.  You can also order your credit report directly - You’re entitled to free copies of your credit reports annually from the major credit bureaus: Equifax, Experian, and TransUnion.  A credit report details your borrowing history, including any late payments and bad debts, and typically includes a credit score. Lenders lean heavily on your credit report and credit score in determining whether, how much, and at what interest rate to lend for a home. Most require a minimum credit score of 620 - 640 for a home mortgage.

 7. Get prequalified

Meet with a lender to get a prequalification letter that says how much house you’re qualified to buy. Start gathering the paperwork your lender says it needs. Most want to see W-2 forms verifying your employment and income, copies of pay stubs, and two to four months of banking statements.

If you’re self-employed, you’ll need your current profit and loss statement, a current balance sheet, and personal and business income tax returns for the previous two years.

Other web resources are listed in link below in the Homebuyer Training Voucher Program under Cerified Home Buying Training Agencies.

Get a free credit report from each of the three credit reporting bureaus