Friday, May 30, 2014

Yahoo Homes

Waiting to buy a house? It'll cost you

Experts agree: There's no better time to buy a home than now. Find out why.

Yahoo Homes
By Lee Nelson May 28, 2014 12:41 PM

Timing is everything when it comes to a lot of things - baking a soufflé, fertilizing your lawn, and buying a home. Not so sure about that last one? With interest rates going up and housing prices on the rise, you may think that it might not be the best time to purchase a home or even refinance the one you've got. But experts disagree.

"It is a big deal to buy a house. But if you do your homework and have the right documentation ready, this could be a great time to buy a home for many reasons," says Jay Plum, executive vice president of Huntington National Bank, in Cincinnati, Ohio.

Read on for the five major reasons why mortgage experts believe that there is no better time than the present to get that dream house you've always wanted.

Reason #1: Interest rates won't stay this low forever

"A reason to look now into buying a home or refinancing is because these rates won't stay [put] forever. That's what rates do - they go up," says Plum.

In fact, the interest rate for a 30-year fixed mortgage is expected to go up to 5 percent by the fourth quarter of this year and 5.3 percent by the end of 2015, according to a recent forecast by the Mortgage Bankers Association (MBA).

Why are rates rising? Well, one huge factor is that the feds will start raising rates about six months after they stop buying mortgage bonds, which is projected to happen sometime in 2015, says Plum.

"[Rates] probably won't start shooting up quickly. But a quarter of a point on an interest rate can mean about $100 more each month on [a homeowner's] loan. For a lot of families, that can make a big difference," he says.

Reason #2: Credit score requirements are lowering

Is your credit score lower than you'd like to admit? Well, good news: Credit score requirements for borrowers taking out mortgages are easing.

In March, credit scores on purchase mortgages stood at 755, down from 761 in the previous year, according to data from Ellie Mae, a mortgage-software provider. Credit scores for FHA loans dropped even lower to 684, compared to 696 a year earlier.

What brought on this change? The 2014 market is expected to be a more purchase-focused market, says Vickee Adams, vice president of external communications for Wells Fargo Home Lending.

"Having a broader credit score range will serve to attract more borrowers into the market," she explains.

But why is there a need to attract more borrowers? Well, the demand for refinancing has dropped considerably. Refinance applications are about 70 percent slower than a year ago and are expected to continue to decline, according to a statement by the MBA in April 2014. As a result, banks are trying to find ways to boost lending to homeowners, including lowering credit score minimums.

Reason #3: Spring and summer are the best times to buy a home

It has been a brutal winter, and people who wanted to sell their house just didn't want to bother with all the snow and cold weather, says Lawrence Yun, chief economist for the National Association of Realtors in Washington, D.C. The same goes for people wanting to buy a home - they just stayed put, he adds. 

"Many people who were forced to delay putting their house up for sale are doing so now. But spring has always been an important time in the real estate business,” Yun says. In fact, warmer seasons like spring and summer have always been a popular time to buy a home.

People think about moving during summer vacation, because their kids will be out of school then, which helps makes things easier, says Yun. Buying a new home in the summer gives families enough time for the closing and moving before school starts again.

No kids? Summer is still a popular time to sell or buy even for people without children. And it's not just because the weather is nicer.

"People just know that there are more listings coming in the spring and more buyers," Yun says. "But from a buyer's perspective, there will be more competition from other buyers."

Reason #4: Buying is still cheaper than renting

Buying a house is a significant purchase, but in most parts of the country, it's cheaper than renting. If that seems counterintuitive, let's look at recent research by Trulia, an online residential real estate site for home buyers, sellers, renters and real estate professionals.

According to Trulia, homeownership compared to renting continues to be the less expensive way to live in all of the 100 largest metro areas researched. The study compared the costs of renting and owning assuming homebuyers get a 4.5 percent mortgage rate on a 30-year fixed term loan with 20 percent down.

So why should people buy a home now? The gap is getting smaller between the two choices because of rising mortgage rates and home prices, says Jed Kolko, Trulia's chief economist and author of the report.

"Now, at a 30-year fixed rate of 4.5 percent, buying is 38 percent cheaper than renting nationally, versus being 44 percent cheaper one year ago," Kolko says in the report. "Some markets might tip in favor of renting this year as prices continue to rise faster than rents, and if - as most economists expect - mortgage rates rise, due both to the strengthening of the economy and Fed tapering."

However, the percentage is different in every housing market. In Honolulu, buying is only 5 percent cheaper than renting, while in Detroit, buying is 65 percent cheaper than renting.

Reason #5: Home values are still competitive

Are you looking for a bungalow with a white picket fence, a modern metropolitan penthouse, or a cabin in the woods? Well, it might be time to buy your dream abode before prices go too high.

The good news is that that the prices of homes have gone up but haven't skyrocketed, so they're still within reach of many buyers. The median existing home price for all housing types in February 2014 was $189,000, which is up 9.1 percent from last February, according to recent press release by the National Association of Realtors (NRA).

Plus, the housing inventory rose 6.4 percent to 2 million existing homes available for sale, reports the association. So there are more homes to choose from during your search depending on where you live.

"Property values are still very competitive in most markets, but there is a tremendous amount of competition by buyers," Plum says. "If you are looking at buying a home, be prepared to offer quickly, and get preapproved by a lender which will make things go easier."

Tuesday, December 11, 2012

Home Financing Essentials

A Survival Kit for Home Financing
LDS Lenders

Essentials for buying a home

Congratulations on receiving an accepted offer to buy your next home.  There are many things that you will need to do in order to complete this process.  We have put together this survival kit for home financing to help you to know what needs to be done in the next few days.

Loan approval with an LDS Lender.  You will now need to get fully approved for your loan.  Hopefully you have already been pre-qualified or pre-approved and you will now need to get final approval including verifying your current employment, income, bank balances and an appraisal on the property that you are buying.  You should contact your LDS Lender in the next 3 days to start that process.  An Essential Documents Packet will be sent to you at the close of your purchase transaction and will include important documents that you need to keep.

What to expect:
  1. Everything is Risk based to lenders
a)     Down Payment: The more money a buyer puts into their home the less likely they are to walk away from it in times of financial crisis.
b)    Credit Score(s): Higher credit scores get better rates: Above 740 is Excellent, 700+ is good, 680 is average.  You can go as low as 620 in an “A paper” loan if you have a good down payment.  Scores under 620 require sub-prime financing and will need a minimum of 10% down payment.  The lower the score the more down payment or equity you will need to have.
c)     Loan to Value: Higher loan(s) to value will have slightly higher rates. 
d)    Job stability: Lenders are looking for at least 2 years continuous employment on your job or in the same line of work.  There are some exceptions to this such as having graduated from college and now working in that line of work. 
e)     Reserve Savings: Lenders want to see between 2 and 6 months of monthly PITI payments left over in your bank account(s) when you close.  PITI is Principal, Interest, Taxes & Insurance.
f)     There are many loan program variations available.  Consult with your LDS Lender to help you know which is best for you.
g)     All LDS Lenders will issue a pre-approval letter or certificate confirming that you are pre-approved for a loan to buy the home or your choice.
h)    Tips on Credit and running your Credit Report:  Your credit score is reduced when it is run so be careful how often you allow it to be run.  Discuss this with your LDS Lender.
i)      Tips for an easier close.   These suggestions will take some of the mystery out of the process and help make this important event, a pleasant one.
j)      Investment Properties: Lenders know that most homeowners will default on an investment property before they will do so on the home that they live in.  As a result investment properties are a higher risk to lenders and they will have higher rates as well as requiring a larger down payment.

  1. Buyer’s Remorse:  It is common to second guess your purchase and question if you have made the right decision.  After all this is one of the biggest decisions you will ever make in this life. 
a)     We will provide you with a working budget that can be used to compare your current expenses with proposed expenses when buying a home.  We recommend that you fill out the budget and confirm that you are comfortable with replacing your housing payment with the new PITI loan payments.  The mortgage lending industry is fairly conservative and will only approve you for a loan payment that falls within their ratios where most people can make the payments.  Most LDS people will also want to factor in our church donations however, keep in mind that you’ll get a substantial tax deduction as a homeowner.  Where in addition to your church donations being fully tax deductible, so are all of your interest (this is nearly all of your house payment) and property tax payments.  Your LDS Lender will consult with you to make sure that you are buying within your means.
b)    Your LDS Lender will also give you a detailed cost estimate outlining all of the projected costs that you will incur when buying your particular home. 
c)     Money for closing costs: Make sure you have enough money for the required closing costs, prepaid items such as property taxes (6 months), homeowners insurance (1 year’s premium) and impound reserves (usually 2 months of taxes and insurance).  Money for closing costs usually needs to be verified as your ”personal money” unless it is being paid for by the seller.  If you are borrowing this money, the lender will want to add that payment into your qualifying debt to income ratios.  Please be sure to advise your LDS lender so that this can be addressed up front and avoid any problems at closing.  You may also be able to use “Gift Funds” from a family member.  Be sure to discuss this option with your LDS lender as well.

  1. Important Documents: Gather all of your Important documents that you might need while all of your other belongings are packed and/or in transit.  Put these in a safe and accessible place.  After settling into your new home you may want to store these important papers with your income tax documents.

  1. Closing Agent: Different areas of the country have different service providers who handle the closing function.  Some are done by Attorney’s, others are done with Escrow Companies and some are done with Title Companies.  Your LDS Real Estate Agent will advise you as to who will be handling that function on your purchase and your LDS Lender will advise you on refinance transactions. 

Personal Property Inventory: Take an inventory of your home room by room before you start packing.  We have provided the template forms to do so on our website.  This can assist you in identifying what goes into each room of your new home.  It can also be a great resource if something is lost or broken during your move. 

Tips To Make Moving Easier:  Read Moving Tips and Moving Tips Timeline that you will receive from your LDS lender.  Visit the websites on our list of Favorite Websites for moving.  They feature where to go for: school information, local utilities, comparing local phone services & rates, computer technology support, Consumer Reports, driving direction anywhere in the U.S., etc.

Please respect that these forms and templates are intellectual properties of LDS Lenders and are ©copyrighted. 

For More Information contact:


Friday, August 5, 2011 Can Help You Buy Your Dream Home.

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