Buying a Home - Karen's Perspective

USDA Rural Development 100% loans available

ZERO down payment assistance programs are available from the government through the USDA.

Section 502 Loan Guarantee Program loans are primarily used to help low-income individuals or households purchase homes in rural areas. Under the guaranteed loan program, a loan guarantee through the Housing and Community Facilities Programs means that, should the individual borrower default on the loan, HCFP will pay the private financier for the loan.

Under the terms of the program, an individual or family may borrow up to 100% of the appraised value of the home, which eliminates the need for a down payment. Since a common barrier to owning a home for many people is the lack of funds to make a down payment, the availability of the loan guarantees from HCFP makes the reality of owning a home available to a much larger percentage of Americans.

Eligibility requirements include:

01 / 29 / 2010
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What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Following is another Guest Post. This one was written by Lisa Delzompo. Lisa sells real estate in Temecula, CA. I appreciate her allowing me to re-post her article here.

What Does It Mean to You, the Buyer, that You Have to Go “Full Doc”

Over the past year, lending guidelines have tightened so much that, if you’re paying attention at all you know, buyers have to qualify “full doc” for loans. That means, full documentation of the buyer’s income, debts, and assets.

It is to the point that I provide my clients an overview letter, explaining the buying process in detail, including the fact that you’re going to be asked for information up front, during, and at the end of the loan process.

That sounds straightforward, but let’s take a look at what that means. First, keep in mind that if you provide an item of information, it needs to be Legible. I capitalize the word to point to its importance. The item you provide will be faxed or scanned another time after you send it to your loan officer; the people receiving that last copy are the underwriters, the ones whose job it is to sign off on every item of the checklist for your loan, saying you fulfilled that condition. Their job is on the line; they don’t know you from anyone; they don’t trust you; and they don’t distrust you. It simply is their job on the line to make sure that the loan they approve contained each item required on their checklist. If an item is blurry enough that they can’t read enough of the important details there, they will not sign off on that condition. If you have provided the same copy several times, and they are still saying they cannot read it, then you should go get a new, clean copy and send it in, asap. If you take several days to provide items you’ve been asked for, the process will take that much longer. In this age of internet and fax, it is common for clients to be able to provide items within minutes of being asked for them.

Let’s get to more details:

01 / 20 / 2010
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90 Day wait period to sell properties waived – Hooray!

Recently, HUD enacted a ruling that a property could not be purchased and resold in less than 90 days. Well, you could, but the property would not be eligible for FHA insurance meaning the buyer could not qualify for FHA backed loans.

Effective February 1, 2010, this 90 day waiting period is waived.

There are conditions, of course. Some of them include:

the transactions must be arms length. There must be no interest between the buyer, seller and/or any other party to the transaction.
no additional flipping activity exists during the previous 12 month time frame for the subject property
the property was marketed openly
if the sales price is more than 20% above the sellers purchase price, increase in value must be justified by supporting documentation and appraisal as well as inspection

Why is this unnecessary 90 day wait period finally being waived (even if temporarily)?

01 / 18 / 2010
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New RESPA rules take effect 1/1/10

HUD

The Real Estate Settlement Procedures Act or RESPA, as defined on the HUD site, is about closing costs and settlement procedures.

Federal regulations have just changed RESPA requirements.

Some of the major changes are:

There is a new HUD-1 statement. The old one was 2 pages, the new one is 3.
There is a new GFE, Good Faith Estimate, which gives you an estimate of your settlement charges and loan terms you are likely to incur to obtain a specific loan.
The government has eliminated the cap on FHA origination fees.
Previously HUD limited origination fees to 1 percent of the mortgage amount for most FHA loans.

According to the HUD site, the intent of the standardized GFE and HUD-1 is to provide borrowers an easier means of comparing loan offers, and to determine that they are getting the loan at settlement that they were offered in the GFE.

If you already had a loan in process, HUD states that, if your GFE was issued on the old form prior to January 1, 2010, then the old HUD-1 form must be used even if closing will occur after January 1, 2010.

01 / 08 / 2010
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Ready to Buy/Sell a Home? Now’s the time..

FHA is tightening underwriting standards. Housing Secretary Shaun Donovan announced in December that FHA has plans to:

increase the amount of upfront cash homebuyers need to bring to closing

Right now, the amount is a minimum 3.5%.

raise minimum FICO scores for new borrowers

I’ve heard that the increase will be from 620, where it is now, to 640.

reduce seller concessions from 6% to 3%

How much the seller can offer to help the buyer with things like closing costs.

and raise mortgage insurance premiums

These new standards could take place as early as April. If you’re thinking about buying or selling, looks like the best time in 2010 will be the first quarter.

01 / 06 / 2010
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Buying a Home

Home Inspections – What to look for

Home Inspection

First of all, always get a home inspection.

Why? Because you don’t know what you don’t know. You need to have a licensed home inspector to go through any property you plan to buy. This is your opportunity to learn what to expect after the deal is closed.

Even with new construction, don’t assume the builder or contractors did everything right simply because the house passed code.

Be sure you hire someone who is competent, thorough and trustworthy. Get dependable referrals and do some research before choosing an inspector. Always ask about licensing, professional affiliations and credentials and whether the inspector carries errors and omissions insurance.

When having a property inspected, go along with the inspector, ask questions and listen as he gives his professional opinion about the house. Reading a written report is not nearly as valuable as being there, discussing items as they’re found, and leaving with a truer picture of the condition of the property.

01 / 04 / 2010
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Greensboro 5 Year Median Sales Prices

The year ended better than it began but looks like we’re back at 2006 pricing.

Median Sale Price

More Greensboro Home Values

12 / 22 / 2009
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Turned Down for a Mortgage? What’s Next?

First of all, you’re not alone. Hope that helps… According to the Mortgage Bankers Association in Washington, D.C., about half of all mortgage applicants are now being turned down. Half. Good grief, that’s a lot.

Did you receive a formal rejection spelling out the reasons you were turned down? If you were turned down because of information on your credit report, federal law entitles you to something called an “adverse action” notice.

According to the Federal Trade Commission, when credit is the issue, you’re entitled to a copy of the results showing the reason for the negative report from the credit reporting agency that provided the data on which the lender based its decision. Whew! You’re also entitled to a free credit report; see the FTC web site for more information.

You’ll want to know the reason for the rejection so you can fix what’s wrong, if anything is, and make sure you clear it up. You also want to make sure that the reason is valid and not a mistake on your credit report.

12 / 19 / 2009
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Guest Post: TRADE UP! 5 Reasons why this is the BEST market to upgrade!

Many thanks to Daniel Dima Batsalkin for this article. I found it on his site and asked his permission to re-post it here.

Have you thought about getting that bigger, better house in a better neighborhood? Well, I agree with Daniel that now is the best time. Prices are down and extremely negotiable, selection is huge, and interest rates cannot possibly stay this low for much longer.

Many people are concerned that they will loose money on their current home if they sell now. Daniel will tell you what’s wrong with that argument. I add to his comment that you may want to consider renting your current home rather than selling it. My husband and I just traded up in a big way over the summer. Rather than take a loss in this market on the home we were leaving, we signed a lease option agreement with people who could not qualify at this time for a loan. The profit we’re making there helps to offset the increase in our new house payment. There are always options.

If you don’t know what your options are, ask me here!

And now, enjoy Daniel’s post:

12 / 17 / 2009
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$8000 First Time Homebuyer Tax Credit Extended

The bill, approved unanimously by the Senate late Wednesday and signed by President Obama Friday, November 6, extends unemployment benefits for up to 20 weeks.

It also keeps a first-time home buyer tax credit alive until next spring, and expands it to include some people who already own a house.

The bill extends jobless benefits in all states for 14 weeks, and for up to 20 weeks in states where the unemployment rate is above 8.5%.

The $8,000 tax credit for first-time home buyers that was set to expire this month is now extended through April 30.