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
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  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...

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  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
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  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
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  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

WESTBANK SINGLE HOME SALE STATS AS OF OCTOBER 2010

See charts below for Westbank Single Family Home Statistics and compare 2009 numbers to 2010 as of October (Click each Chart to Enlarge):





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Dos & Don't of Selling Your Home

Many people think that selling a home is easy.  All you have to do is put a sign in the front yard and wait for people to call.  The fact of always being available for phone calls and that many calls are from people that are just being nosy is not considered.  Neither is all the paperwork involved and legal issues that they are leaving themselves wide open for.  Selling your own home can become your part-time job that needs your full time attention.  Having a Real Estate Agent has many more advantages than you might think and actually save you money instead of costing you more.  Most people selling their home on their own have no idea how to price their home or how to keep up with price checks in the current market.  Buyers see these homes as "Discounted Properties" instead of a regular listing, therefore, you could actually make less selling your own property than if you paid for professional help.  Your local Real Estate Agent can give you up to date information on comparable homes as well as insight on what you need to do to get your home ready for the market...    and also much more. 

A good Realtor can save you much time, money and stress in selling your home.

 

If you are selling yourself, or even if you have an agent, you still want to be aware of what buyers are thinking about your home and how you can win them over.  Most buyers will not be as honest with a homeowner than they would with a Realtor.  Below are links to 3 articles written for House Logic that give more information on dos and don'ts of selling your home, as well as pricing.  If you still need help, give me a call.

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  (New!)

  Pet Odor Can Chase Away Buyers

  Don’t let pet odors derail your home sale. Read
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  Dos and Don’ts of Homebuyer Incentives

  Homebuyer incentives can be smart marketing or a waste of money. Find out when and how to use them. Read
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  How to Use Comparable Sales to Price Your Home

  Before you put your home up for sale, use the right comparable sales to find the perfect price. Read

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Southshore Home Sale Statistics & Homeowner Advantages

How are Home Sales on the Southshore this year compared to last year?  Let's go over some facts before finding out.  Everyone is worried about the economy now days.  So much so that some very qualified Buyers are afraid to take advantage of the lowest interest rates in years and some very low home prices.  The fact remains that this will not last forever and if you are one of the people with a steady job, good credit, with the need or desire for a new home, it is time to seize the market!  Don't believe you can afford a home?  Don't know if your credit is good enough?  Well, what will it hurt to find out!  Here is a link to my list of preferred lenders - you can call one of them to find out if you are ready now, or if not, how far are you from getting there and what to do: CLICK Here for MORTGAGE LIST. 

First, let's look at the statistics.  Most of the statistics I've been posting are for the Westbank, but this time I will give you the Home Sale numbers for the whole Southshore (Click on Chart below to enlarge for Detail):

It appears that as the tax credit incentive disappeared, so did buyers.  Soon after we started out the year, we were above last year's numbers, but we have been going more down hill ever since July.

There are still plenty reasons to buy a home now.  With interest rates being at an all time low, buying now will put more money in your pocket than if you wait to buy later when rates shoot up.  Click Here to find out Why this is a Great Time to Buy a Home. 

Read this article below to find out about Homeowner tax advantages:

                                                                                                                                                                      



7 Homeowner Tax Advantages

When you’re evaluating how much home you can afford, make sure you factor in the tax advantages of homeownership. Read

Below are more articles for your information on tips to improve your credit and determining how much home you can afford:

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  4 Tips to Determine How Much Mortgage You Can Afford

  By knowing how much mortgage you can handle, you can ensure that home ownership will fit in your budget. Read
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  7 Tips for Improving Your Credit

  Here’s how to clean up your credit so you get the least-expensive home loan possible. Read

Remember, If you have any questions about any information provided here or if you need to weigh your options, feel free to give me a call.  I am here to help.

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