Tag Archives: bills

Money Monday: Money tips for homeowners

With homeownership, there are both benefits and costs involved (not just the down payment).

As the homeowner, your financial responsibilities extend beyond the down payment and monthly mortgage payments; there will be maintenance items to maintain and pay for, yearly tax bills, and the unexpected repairs to resolve. CNN Money does have a few money tips to help those would-be and already-are homeowners; read their article here.

Photo from Pictures of Money

Photo from Pictures of Money

1. Create a new budget

Instead of rent, you now have house expenditures. Besides the change in the monthly payment, there will likely be an increase in utility bills (it costs more to cool and heat and power a larger living space!), the potential watering and maintenance of a yard and garden, and other things such as a trash bill and your tax bills.

Estimate your monthly expenses initially, but then keep track of the actual monthly money going out for awhile, and then base your budget on that.

2. Plan on repairs

Even with a turn-key property, most likely you will have repairs to make pretty soon down the road. “Most homeowners spend 1% to 4% of their homes’ value each year on repairs and maintenance.” (CNN Money. “4 money tips for new homeowners”). And if you have an expensive repair coming up, like replacing the roof, try to save a little more each month in preparation.

3. Expect your property taxes to go up

Property taxes start out based on the assessed value of your home at the time of purchase. But,

Property taxes have a tendency to rise, even when home values drop. Back in 2000, localities across the U.S. collected an estimated $247 billion in property taxes, but by 2010, that number almost doubled to $476 billion despite the decline in home prices from the infamous housing bubble implosion. (CNN Money. “4 money tips for new homeowners”)

4. Expect big payments

Homeowner’s insurance and property taxes are some hefty bills, that you should plan for accordingly.

Read up on all of CNN Money’s tips here: “4 money tips for new homeowners”

Money Monday: Prioritize bills when you’re short on cash

How to prioritize which bills to pay

If you’re in a tough spot and can’t pay all of your bills, then you need to make a strategic decision on what to pay and what to delay.

money

Daily Finance gives advice on what “five bills you should always pay on time, each month. Not doing so could damage your credit, leave you with huge financial penalties, or even cause you to lose your home or car.”

1. Your mortgage
2. Student loans
3. Credit card payments
4. Your rent
5. Auto loans

Details on each of these bills to pay and the reasons why you shouldn’t miss payment is covered by Daily Finance. And the bills you need to pay late? They have some tips on dealing with that, too.

Read all of Daily Finance’s article here: “Prioritize These 5 Bills When You’re Short on Cash”.

Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure

We all know short sales are not so “short”–but this proposed bill outlined by DSNews.com’s article may speed up the process, while also preventing foreclosure.
 
To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.  
 
Senators Lisa Murkowski (R-Arkansas), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
 
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
 
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
 
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer will be limited to one extension of no more than 21 days.
 
The bill will also…
 
Read the rest of this article by DSNews.com here: “Proposed Bill to Speed Up Short Sale Process and Prevent Foreclosure“.

Top six reasons mortgage applications are rejected

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. All told, the Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It’s tough — especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.FFIEC

1. Income issues. Most failed applications falling into this category have income too low for the mortgage amount they are seeking; often, a spouse’s credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender.

But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

2. Muddled money matters. If the mortgage for which you’re applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income — all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

3. Credit issues. Today, the mortgage-qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

4. Property didn’t appraise. Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up — some would say, even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller.

This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home.

5. Condition problems. With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot.

And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

6. Technical difficulties with application. The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed.

If any of these mortgage loan application glitches arise in your homebuying or refinancing process, it’s critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take.

In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

Tara-Nicholle Nelson is an author and the Consumer Ambassador and Educator for real estate listings search site Trulia.com.