Planning for the Mortgage!

Here are some great tips to prepare for your mortgage. And also I have a great recommendation for loan officer, give me a call 602-0055 or roger@lowesflatfee.com

With good preparation, most things are easier. That works in mortgages too! Today, I want to give you some ideas that can make your mortgage experience less painful.

Income Items:

1. Gather your documents. Today, many people will have to produce 2 years’ complete tax returns, including W2′s, 1099′s, K1′s, and all the schedules, as well as a month’s worth of pay stubs.


2. Be prepared to explain them. Deductions in your returns and your pay stubs may impact the income your lender will use to qualify you which, in turn, has a big impact on the loan you will get.


3. Have a breakdown of base pay versus overtime for both your pay stubs and 2 years’ W2′s. Lenders treat overtime (and bonus income) differently than your base pay. Be prepared to explain any changes over the last few years because your loan officer will ask you about it.

Asset Items:

 

1. Start accumulating your bank statements. Lenders look back 3 months from when you sign your contract of sale.


2. You will have to explain any and all large deposits (which are defined as deposits greater than your regular pay check) because lenders want to make sure you haven’t taken out any new loans that aren’t on your credit report.


3. Avoid any significant cash deposits. However, if you did have a cash deposit, understand that the lender will have you source it (a bill of sale and DMV receipt for that motorcycle, for example).


4. If you will be receiving a gift, consult your loan officer on how to document it (from the donor’s ability to how you deposit it).

Credit Items:

1. Ask your loan officer to run your credit and go over it with them. Believe it or not, most credit reports contain errors. Best to identify them and get working on correcting them as early as possible.


2. Do what you can to pay down your balances to under 30% of available credit to help you get the best score possible.


3. Do NOT close accounts or pay off collection accounts without discussing it with your loan officer. Either one of these logical moves can actually have a negative impact on your score.

When buying a home, remember the Boy Scout motto, “Be prepared”. Following these suggestions will make your loan approval easier and less stressful.

 

Foreclosures: What About the Children (Part 2)

Yesterday, we reported on the adverse impact foreclosures have had and will continue to have on the children of this country. Today, we want to talk about how parents can soften the effect.

If you can’t keep your house, you must decide how to leave and determine the impact of your decision on your children.

From a financial standpoint, short sales are always the better option. From a pure family situation (both your family and the families in the neighborhood), you must also make a decision.

If you allow your home to go to foreclosure, you have two choices: move and leave the house vacant or stay and wait to be evicted.

The first option leaves your neighbors with an empty house and all the challenges which that creates for a neighborhood. The second choice can create even more stress for you and your children as you wait for the day an official knocks on your door demanding you and your family leave immediately

In contrast, the short sale process allows you to work with the bank and pre-determine the day you will move. The new owners usually move in the same day. Your family moves with a plan and you don’t leave the neighborhood with the headaches associated with a vacant house on the block. There is a level of dignity in this type of move that almost never takes place during the foreclosure process.

You may have heard of the nightmares that have surrounded short sales in the past. However, there is a new army of both real estate and mortgage professionals who have now been trained on the short sale process. I can help you.  Call me today. 602-0055 or roger@lowesflatfee.com

In most cases, a short sale will be the right thing for you, your children and your neighbors’ children.

 

Foreclosures: What about the Children? Part 1

Here is a sobering article about the negative affect on children foreclosure can have.

We were recently troubled by the findings of a research paper authored by Julia Isaacs of the Brookings Institute for the organization First Focus which was titledThe Ongoing Impact of Foreclosures on Children. In the report, Ms. Isaacs quantified the number of children that have been impacted:

• 2.3 million children have already lost their homes to foreclosure


• 3 million additional children are at risk of losing their home

She also noted the four ways foreclosures may affect children negatively:

“First, and most obviously, families receiving foreclosure notices are much more likely to move than other families, and, … children who move frequently do less well in school.

Second, homeowners receiving a foreclosure notice are under a lot of financial and psychological stress, as they struggle to stay in their house, and if that fails, to find a new home quickly…parents under a lot of financial distress sometimes engage in harsher and less supportive parenting, which in turn can lead to negative behaviors on the part of children, making it harder for them to interact well with peers and in school.

Third, foreclosures and housing instability have a negative impact on physical as well as mental health, with studies finding higher rates of non-elective visits to emergency rooms and hospitals in ZIP codes with the highest foreclosure rates, as well as a strong association between housing instability and postponement of needed health care visits and necessary medications.

Finally, because foreclosures are often highly concentrated in certain neighborhoods, children living in or near foreclosed homes may suffer the consequences of living in neighborhoods with more vacant houses, higher crime rates, lower social cohesion, and a lower tax base.”

If you find that you are at risk of foreclosure, know your options. The new National Mortgage Settlement might give you a pathway to stay in your home.

You can get information on the opportunities the settlement offers here.

However, if you have exhausted all your options and now must decide between a short sale and foreclosure, analyze what is the best decision for you and your family. Tomorrow, we will discuss these choices.

 

Great New Listing by the Boise River!

I just listed this lovely home in Spring Meadow sub that has been completely upgraded in the last year-to the tune of over $150,000 in improvements. This place is gorgeous! The quality is apparent throughout, all hardwood floors and travertine through out the whole house. I will share a couple of pictures, for more information you can call me or visit my website. www.loweflatfee.com



 

 

 

 

HFA Reconsiders Mortgage Write-Downs

Okay my question about the following article is this, it reducing mortgage principals can save Fannie and Freddie $1.7 billion, why would it end up costing the taxpayers more than the alternative?

From the Real Estate Daily News

"Fannie Mae and Freddie Mac could possibly curb its losses by $1.7 billion if the mortgage giants reduced the mortgage principal on about 691,000 underwater home owners, according to a newly released analysis.

The finding has prompted the Federal Housing Finance Agency, which oversees Fannie and Freddie, to reconsider its long-held stance on forgiving some mortgage debt of underwater home owners.

Edward J. DeMarco, the FHFA’s acting director, said Tuesday that in some cases it might make sense for the GSEs to reduce the mortgage principal on some mortgages in order to prevent the home owner from defaulting on their loan.

But such a move might come at an extra cost to taxpayers, DeMarco warned during a speech at the Brookings Institution on Tuesday.

“This is not about some huge difference-making program that will rescue the housing market,” DeMarco said. “It is a debate about which tools, at the margin, better balance two goals: maximizing assistance to several hundred thousand home owners while minimizing further cost to all other home owners and taxpayers.”

DeMarco still has some concerns about reducing the principal on some mortgages.

“Will some percentage of borrowers who are current on their loans be encouraged to either claim a hardship or actually go delinquent to capture the benefits of principal reduction?” DeMarco said.

The Obama administration in recent weeks has been pushing the agency to reconsider its stance on principal mortgage reductions, arguing that it can save money, reduce the chances that underwater home owners will walk away from their mortgage, and help stabilize the housing market.

The FHFA is expected to make a final decision in the next few weeks on whether to allow mortgage write-downs."

 

Ada County Market Report-LOW Inventory

Sales in March 2012 were 515 in Ada County, a decrease of 2.2% compared to March 2011.   Year-to-date sales are 1,353; 7.2% over the first three months of 2011.

Even though sales were down a little; dollar volume for March was up 7%...(more on this in the “Median Price” section below)

Historically, March sales outpace February by an average of 30%. March 2012 sales increased by 17% over January 2012...(more on this in the “Inventory” section below)

Nationally we know that one job is create for every two homes sold.  With 1,353 sales so far in 2012 we have helped to bring 676 jobs to Ada County.  We also know that for each homes sold there is a $60,000 cash infusion to the community; based on YTD sales we have added $81Million to our valley’s economy so far this year.

Of our total sales in March… 43% were distressed….down 1% from February 2012. In March 2011, 58% of our sales were distressed. REO sales were a little more than half of all distressed sales and short sales were a little less than half.

Pending sales at the end of March were 1,134; an increase of 16% from the end of February. In general pending sales increase in strongly in March compared to February; and should continue to increase all the way through April or May. The percentage of pending sales in distress decreased 8% from February, totaling 33% overall. This is our first month below 40% in several years.  Of Pending Sales in distress, short sales outnumbered REO’s 2 to 1.

At the end of March, we had 23% more sales pending than at the end of March 2011.

February median home price was $154,900; up 14% from March 2011; and down 2% from February 2012. Median home price is up 22% since January of this year.

New Homes median price for March was $201,558; an increase of 6% from March 2011.

The number of houses available continues to decrease. At the end of March our total active inventory was 1,879 homes. This is down 3% from February and 29% less than last year at this time.  The last time we had an active inventory this small was in December of 2001!  Interestingly enough…sales for that month in 2001 were 517…essentially the same is March 2012.

At the same time, the percentage of distressed active inventory dipped 1% to 33%. We have been hovering between 33% and 36% for the last year. We remain well below the 40% levels set last spring….when we were on the increase. Of our Distressed Inventory 91% is Short Sales and only 9% is REO.

In Ada County we  now have less than 4 months of inventory on hand…3.9% to be exact.

The price category in shortest supply is <$119,000 with 2.3 months. In the range of $120,000 to $159,999 we have 3.1 months. All price points up to $250,000 have less than 4 months supply. We have benefited for nearly two years from inventory levels much lower than national average. Now, however, we are seeing a measurable slowdown in sales as the inventory continues to fall. Multiple offers are much more prevalent; now becoming the norm.

REALTOR® Magazine online offer great insight into managing multiple offers with theirNegotiating Toolkit (http://www.realtor.org/toolkits/nego12) .

Based on March sold data, our most desirable price point is <$120,000 at 30% of all sales.  The next largest price point sold is $120,000 to $160,000 which accounted for 24% of total sales.  The biggest increase was in sales between $200,000 and $250,000; which were up 100% from January 2012 to 18% overall.

Comparing Sales to Inventory, for key price points… @<$120,000 we sold 50% of all that we had in March; for $120,000 to $160,000 we sold 33% of all that was available; for $160,0000 to $200,000 we sold 32% of the total available.

Translated to a retail metaphor…the shelves are getting pretty bare.

There is no longer any doubt that, in Ada County, we are exiting our “recovery” mode and are full into “acute inventory shortage” mode.

The challenge to our continued recovery is available product. To all of you builders out there…please come back.  Sorry about the last few years. We really need you now.

There continues to be broad speculation on the impact of REO properties coming onto our market in a way that would upset our continued recovery.   The level of consumer demand, and the nearly bare cupboards of home inventory suggest that we will be able to withstand the impact.

6 Don't After You Apply For A Mortgage

If you are purchasing a home, PLEASE, pay attention to these. It is so sad when a buyer is suddenly ineligible to buy a home after doing one of these, and yes I have seen it.

I learned a long time ago that “common sense is NOT common practice“. This is especially the case during the emotional time that surrounds buying a home, when people tend to do some non-commonsensical things. Here are a few that I’ve seen over the years that have delayed (and even killed) deals:

1. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.


2. Don’t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.


3. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won’t be making the payments, the lender will be counting the payment against you.


4. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.


5. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.


6. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light.

Courtesy of KCM Blog.