With the Foreclosure market hitting another peek soon experts are predicting a serious increase in rent prices. Plenty of foreclosures should hit the market this year and we will see another great buyers market. There has been a lot of talk about increasing the amount a buyer would need to put down to make the sale go through. If this happens it will make qualifying more difficult.
The interest rates are still low although they are starting to climb slowly. Buying a home should always a long term investment. With rental rates going up and property value staying relatively low this year, maybe even going down a little, I think it is definitely the right time to buy. The trouble is getting the loan to fund.
I want to caution all buyers looking for a loan. Pre-Approval is a nice indicator but when it comes to funding the loan and the underwriting process there are many hurdles to overcome. You must have a good debt to income ratio, a great work history, taxes in order and paid in full, and decent credit. Also under FHA guidelines you will need 3.5% down, presently, and you need to show that in the bank for at least 2 months or where it came from. Unless you have cash. If you have cash none of this matters.
Closing costs are another major cost on top of the purchase price. They are usually about 3% of the purchase price. When writing your offer, have the agent ask the seller to credit the buyer for closing costs. They might say no but in many cases they say yes! That will really save the buyer some cash. In the last short sales I have been involved in the bank said yes to all or some of the closing costs.
So if you are planning to buy and you don't have all cash, get you financial statements in order and be persistent. You have to stay positive and jump the hurdles. If you come to a roadblock, find an alternate route. If you stick with it and succeed chances are you will walk away with a GREAT deal on San Diego real estate.
Friday, July 29, 2011
Great Lender/ Best Friend!
I wanted to talk a bit about lenders today. I work with a great lender and the reason this is important is buying your home in San Diego could depend on it!
I have a client who is looking for the bottom line best deal he can get. He went onto a website and just pulled a random company off the Internet. I have never heard of them and when the escrow was proceeding I asked the lender for some documentation and he dropped the ball. He sent me a underwriting-approval that wasn't signed by him. I thought that was a little strange and when I asked for a signed version he never supplied it.
We ended up going with another condo that didn't have quite as many issues and the agent asked us work with his lender. Now the days of agents getting kicked back on deals is over. Regulations forbid it. The reason he asked us to use his lender is because he knows she is awesome. She is getting her loans approved and closed.
Pre-approval is easy but underwriting can be very nerve racking. Underwriters are investigating buyers more than I have ever seen. You need to make sure all your financial info checks out before your pre-approval. It's good to get your documentation in right away so if there are any issues that need to be resolved you can take care of it ASAP. It is very risky to try to fix things once you have found a property, gotten pre-approved, are in escrow waiting for the loan to fund.
You don't want to risk losing the home your heart is set on so be diligent in getting your ducks in a row. Find a great lender with lots of experience, success and great response time. Ask them tons of questions and trust your instincts. If you don't get answers that make you feel safe and comfortable "NEXT" them. Your agent and lender will be your greatest assets in your home buying process.
I have a client who is looking for the bottom line best deal he can get. He went onto a website and just pulled a random company off the Internet. I have never heard of them and when the escrow was proceeding I asked the lender for some documentation and he dropped the ball. He sent me a underwriting-approval that wasn't signed by him. I thought that was a little strange and when I asked for a signed version he never supplied it.
We ended up going with another condo that didn't have quite as many issues and the agent asked us work with his lender. Now the days of agents getting kicked back on deals is over. Regulations forbid it. The reason he asked us to use his lender is because he knows she is awesome. She is getting her loans approved and closed.
Pre-approval is easy but underwriting can be very nerve racking. Underwriters are investigating buyers more than I have ever seen. You need to make sure all your financial info checks out before your pre-approval. It's good to get your documentation in right away so if there are any issues that need to be resolved you can take care of it ASAP. It is very risky to try to fix things once you have found a property, gotten pre-approved, are in escrow waiting for the loan to fund.
You don't want to risk losing the home your heart is set on so be diligent in getting your ducks in a row. Find a great lender with lots of experience, success and great response time. Ask them tons of questions and trust your instincts. If you don't get answers that make you feel safe and comfortable "NEXT" them. Your agent and lender will be your greatest assets in your home buying process.
VA Home Loans are SWEET!
I went to a great VA lending seminar today and got some really inspiring information. Some qualified military members qualify and don’t even know it! It is a program offered to past and present members and you can use it over and over. Some of the reasons why you should utilize it are:
Lower interest rates
Fixed 30 year loan
Zero down/ 100% financing
No prepayment penalties
Liberal credit guidelines
Credit scores 640 and up usually qualify
No BK or foreclosure for at least 24 months
The maximum loan amount for SD county is $537,500. The limit varies from county to county. There is a VA Jumbo that can go up to 1,500,000.
There is a small funding fee for the first time use with 0 percent down and each subsequent use but if you put 509% down that number lowers significantly. Also if you are collecting disability pay it could go away completely.
In some cases you housing allowance could be more than your monthly payment which would mean you would be making money by owning a home.
You might be eligible and get a much better deal than people going in conventional. If you are eligible and not taking advantage I have but one question, Why?
Lower interest rates
Fixed 30 year loan
Zero down/ 100% financing
No prepayment penalties
Liberal credit guidelines
Credit scores 640 and up usually qualify
No BK or foreclosure for at least 24 months
The maximum loan amount for SD county is $537,500. The limit varies from county to county. There is a VA Jumbo that can go up to 1,500,000.
There is a small funding fee for the first time use with 0 percent down and each subsequent use but if you put 509% down that number lowers significantly. Also if you are collecting disability pay it could go away completely.
In some cases you housing allowance could be more than your monthly payment which would mean you would be making money by owning a home.
You might be eligible and get a much better deal than people going in conventional. If you are eligible and not taking advantage I have but one question, Why?
Friday, July 15, 2011
Keep your credit in check.
If you are buying a house remember to keep your credit in check. Meaning no major purchases during the transaction. The lender will qualify you based on your income to debt ratio. A major purchase can throw that number off and put the transaction at risk. They pull your credit in the beginning to get you pre-approved but then again when the loan funds at the very end of escrow. You might think that you are safe after you get pre-approved but it is better to put any purchases on hold until after escrow closes.
Thursday, July 14, 2011
Short Sales, Got Patience?
You need patience with a Short Sale.
Short Sales can take a long time. As a realtor I have seen some homes on the market for over a year. The best time to bid on a short sale is after a buyer has walked but the listing agent already has an acceptance from the banks.
Typically a short sale is created when a buyer defaults on their mortgage payments. The buyer owes more on the home than it is worth. Making the payments month after month sends the owner into financial distress. Eventually they stop paying.
The bank usually waits a few months hoping the buyer will catch up and continue to pay on the property. When this doesn’t happen they will file a notice of default. This means the bank is starting to foreclose on the home.
The owner will list the property with an agent who will need to acquire certain documents that show the owner incapable of making payments. They will send someone out to do a BPO (valuation of the property). Sometimes these BPO’s are way off and the bank thinks the property is worth more than it is. In this case a lot of negotiation will be necessary.
All these negotiations can take 3-12 months and you never have a guarantee. Hopefully the bank will take the money but in some cases they have sold a property on the courthouse steps while a buyer was waiting for a response from a negotiator from the same bank.
You can get a really great deal but you will need to be patient and I recommend keeping your options open. Until you have an acceptance from the bank you really don’t have a deal. Which is why if the bank has already approved the short sale your chances are much better. You could have a closed transaction in 1-3 months if the bank is ready and willing to accept your offer.
Short Sales can take a long time. As a realtor I have seen some homes on the market for over a year. The best time to bid on a short sale is after a buyer has walked but the listing agent already has an acceptance from the banks.
Typically a short sale is created when a buyer defaults on their mortgage payments. The buyer owes more on the home than it is worth. Making the payments month after month sends the owner into financial distress. Eventually they stop paying.
The bank usually waits a few months hoping the buyer will catch up and continue to pay on the property. When this doesn’t happen they will file a notice of default. This means the bank is starting to foreclose on the home.
The owner will list the property with an agent who will need to acquire certain documents that show the owner incapable of making payments. They will send someone out to do a BPO (valuation of the property). Sometimes these BPO’s are way off and the bank thinks the property is worth more than it is. In this case a lot of negotiation will be necessary.
All these negotiations can take 3-12 months and you never have a guarantee. Hopefully the bank will take the money but in some cases they have sold a property on the courthouse steps while a buyer was waiting for a response from a negotiator from the same bank.
You can get a really great deal but you will need to be patient and I recommend keeping your options open. Until you have an acceptance from the bank you really don’t have a deal. Which is why if the bank has already approved the short sale your chances are much better. You could have a closed transaction in 1-3 months if the bank is ready and willing to accept your offer.
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