Tag Archives: conventional

Buying is winning the lottery

With the current residential real estate market for buyers in the throngs of a literal feeding frenzy, due to the rising infestation of investor buyers, the buyer looking to buy a home for their family to live in is having massive competition.

While inventory is currently contracting and sales are on the rise, six months from now we will know for sure if the market will be positive–meaning that values will finally be officially on the rise. There are some areas that are seeing an increase in values.

I have several listings that range in the low price ranges of $200’s, to $600K — and  these are seeing multiple offers from investors and owner-occupied buyers.  This makes it tough on the buyer purchasing for a family as a first-time buyer who do not have a lot of money to put down. There are up to 10 offers in a matter of a few days on almost all properties now.

This scenario should continue making this a very frustrating time for the first-time,  FHA government & conventional low down payment, or Military Veteran no down payment buyer. This group has to compete with the “all-cash” and 20%+ down payment conventional loan buyers, who usually win due to the restrictions on condition of property by the government loans like FHA and VA, or the low down conventional investor guidelines.

So, how does the low-money-down buyer get in a position to win the property for the buyer who has to compete with the big money buyer? Make sure you are interviewing your perspective agent on how this process will be handled. In this market, this is necessary not only for sellers, but also for buyers. Repairs or a price reduction in a short sale can be done and I can show you how.

Experience is GOLDEN!! Properties having no equity to several liens, a bankruptcy, etc. will not close with an average or most experienced agents, whether representing a buyer or a seller. I have helped several listing agents while I represent a buyer get the property sold in these scenarios.

Whether buying or selling, you owe it to yourself to call me now. The time is now to buy and you will have the most success and satisfaction with the agent who can maneuver through the maze while leveraging you the best deal. I am here to serve you to make sure you WIN the LOTTERY!

Thank you for reading and God Bless.

November 2011’s Market Condition

Existing-Home Sales Continue to Climb in November

Existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors. Also released today were periodic benchmark revisions with downward adjustments to sales and inventory data since 2007, led by a decline in for-sale-by-owners.

Lawrence Yun, NAR chief economist, said more people are taking advantage of the buyer’s market. “Sales reached the highest mark in 10 months and are 34 percent above the cyclical low point in mid-2010, a genuine sustained sales recovery appears to be developing,” he said. “We’ve seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today’s market for buyers with long-term plans.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 3.99 percent in November from 4.07 percent in October; the rate was 4.30 percent in November 2010; records date back to 1971.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said housing affordability conditions have set a new record high. “With record low mortgage interest rates and bargain home prices, NAR’s housing affordability index shows that a median-income family can easily afford a median-priced home,” he said.

“With consumer price inflation rising by more than 3 percent this year, consumers are looking to lock-in steady payments by taking out long-term fixed-rate mortgages. However, the problem remains that some financially qualified families who are willing to stay well within their means are being denied the opportunity to buy in today’s market by the overly restrictive mortgage underwriting situation,” Veissi said.

Source: National Association of Realtors

Six must-haves for mortgage approval

Interest rates are hovering around historical lows, and low interest rates increase affordability, making it easier for buyers to qualify. Yet stories of buyers waiting months to gain loan approval and home purchase transactions not closing on time due to lender’s strict underwriting are all too common.

Some buyers are turned down for illogical reasons. For instance, if you have investments — even if they’re performing well — an underwriter might deny the mortgage because your portfolio doesn’t fall into the underwriter’s risk assessment model.
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One couple was turned down because the husband had worked at his current job for less than a year — even though he was making more money at the new job than he was before.

These buyers were well-qualified. The wife had worked several years for one employer and was able to qualify for the loan on her own. So, the transaction closed, although two months late.

Generally, it’s more difficult to qualify now than it was a year ago. Most conventional lenders require a 20-25 percent down payment. For the lowest interest rates, your credit scores need to be in the 700 range. You need to have verifiable income and cash reserves in addition to your down payment and closing costs.

You could run into underwriting problems if you’re self-employed, as W-2 income is much easier to verify. Other hurdles are lapses in employment and owning a lot of property. Some lenders won’t lend to buyers who have more than three or four residential properties.

If you’re buying a new home before selling your current home, you’ll need to have 30 percent equity in your current home. This needs to be verified by the lender’s appraiser. Also, the lender will want to see a copy of the cashed check from the tenant for the first month’s rent to verify rental income if needed to qualify.

HOUSE HUNTING TIP: As soon as you’re serious about buying a home, find the best mortgage broker or loan agent you can to assist you. Don’t make your selection based on interest rates alone. A good track record counts for a lot.

Closing the deal should be your primary goal. If you have to pay 0.25 percent more to assure your transaction closes on time and that you’re not turned down at the last minute, it’s worth it.

Be candid with your loan professional about anything in your financial picture that might impact loan qualification. A good loan agent or broker will be able to assess your financial situation and anticipate what you’ll need to do to satisfy the underwriter.

Be aware that appraisal issues can impact your loan approval. For example, if a previous owner added square footage without a building permit, the additional square footage probably won’t be included as livable square feet.

If the appraisal comes in for less than the purchase price, the lender might not lend you enough to close the deal. Include an appraisal contingency in your contract.

There are more jumbo financing options available now. Adjustable-rate mortgages that are fixed for 10 years and then revert to an adjustable have a starting rate about 0.25 percent less than a 30-year fixed jumbo. A five-year fixed starts about 0.5 percent to 0.75 percent lower, but is riskier.

THE CLOSING: Because of the risk factor, the lender may want you to have a large cash reserve. Your retirement account counts toward this.

Dian Hymer is a real estate broker with more than 30 years’ experience and is a nationally syndicated real estate columnist and author.