Wednesday, January 25, 2012

FHA to tighten up lending

In an announcement today, FHA is going to update regulations to strengthen the financial outlook of the agency:
"These new regulations strengthen the process by which FHA requires certain lenders to indemnify the U.S. Department of Housing and Urban Development (HUD) for insurance claims paid on mortgages that are found not to meet the agency's guidelines. In addition, the final rule requires all lenders with the authority to insure mortgages on HUD’s behalf ("Lender Insurance" mortgagee) to meet stricter performance standards to gain and maintain their approval status..."
Further in the announcement the regulations discussed fraud, fraud detection, and having lenders be responsible for such fraud. I completely support that idea, but in the past 12 months FHA, Fannie Mae, and Freddie Mac have been able to find what they call fraud on a majority of the files that they own or insure.
I wonder if this is just a way to push unwanted debt onto the banks. If that is the case, the lending world just got a lot smaller.

Wednesday, January 18, 2012

Have You Called Yet?

We are in the third full week of January. Have you talked yourself out of calling because you don't think you have what it takes to buy a home. Over a third of my clients are always so surprised when they find out that their credit is much better than they thought, and they actually not only qualify, but qualify for more than they thought possible. Don't let another year slip away, call me today, and let's see if you can be in your own home in 2012.

Friday, January 13, 2012

How Do I Save for a Down Payment?

You have made the choice that in 2012 you are going to join the ranks of Home Owners. You are on the right track, but you want to have more money saved, both for the purchase, but also to have money left over for those "just in case" moments. You also want to make sure you can handle the new payment on your home. How do you get there? Sometimes it is easier than others to save. Tax time is coming and if you are going to get money back from the government, that is a great way to kick off your savings account. But what other ways can you save money. As an example if the price bracket you are looking in has an example payment of $1200 per month, but currently you are only paying $900 in rent. I would recommend taking $300 each month and putting it into a savings account. If you can do this and not have to touch that money for at least 6 months, then that new payment will not be a problem for you. You have been making the new payment for six months and you $1800 in savings. Also, the lender can see that even though your rent is only $900, that in fact you have been saving the equivalent of your payment, a great compensating factor for qualification.
Another great way to save is what Oprah calls the "Latte Factor." Do you go to Starbucks everyday? Maybe you aren't a Starbucks person, but there is something you spend money on everyday or several times per week that if you cut down or cut out, you could be saving. Write down everything, and I do mean everything, you spend money on every day for a week. Then see what you can do to stop spending the extras. Are you going out to eat a lot, at lunch or dinner. Think about bringing your lunch to work or cooking at home more often. Both of these options will benefit you more than just in the pocket book. Eating food you prepare at home is not only less expensive it is healthier. You may be able to achieve two Resolutions with one step. For more ideas email or call me. Let's get you on the road to home ownership in 2012.

Wednesday, January 11, 2012

Detour-Tax Time Tips

In the past few weeks we have seen more and more tax returns that either have errors on them or that what was filed was not the copy given to the client. When having your taxes done, make sure that what is filed with the IRS is the copy you get from your tax preparer. Also, as you sign your taxes, go through them. Make sure your address is correct, that deductions taken are accurate. Once you sign them, you are telling the IRS that they are right.
Also, some times family, friends, or preparers will give us ideas for write-offs that will help us this year, but could effect us in future years. A great example is when you live with a family member and help pay the mortgage. If you take any part of the interest write off on your taxes, then you will not qualify for any first time home-buyer assistance that may be available for the next three years.
Another example is when you take large 2106 expense deductions. 2106 deductions automatically reduce your income when trying to qualify for a mortgage. If you write-off $6000 per year that is $500 per month we have to reduce your income by. That could make or break a purchase transaction.
I hope these tips are helpful, please feel free to email or call me if you have any comments or questions.

Tuesday, January 10, 2012

Step Four

It's now time to take the next step. You are confident that your credit is good "enough", your income is stable, and you have been saving a little at a time and have a modest nest egg. You may need help from one of the down payment assistance programs, family or the seller, but you don't want to wait any longer with where rates and housing prices are.
Pick up the phone and call! Preferably, call me! 209-825-9383 or email:
You will not know your next step until you talk to a professional. For my clients, this is a free consultation. It can be done over the phone, in person, or online at our website: It takes about 10 minutes for the application process. Don't worry about account numbers or that you won't have everything you need. This is what you will need for the initial application:
Name, Social Security Number, Date of Birth, Address, and Last pay stub or W-2. That's it and I bet most of that information is in your head. If you are calling and applying with a spouse or co-signor, then the W-2 will be helpful because it will have that person's social security number on it.
Stop waiting, start 2012 off right and call!

Monday, January 9, 2012

Step Three: How much is a down payment?

When purchasing a home you will need to have some money for a down payment. There are all types of loans even 0% down, but no matter which loan, you will need to have assets in the bank or someone able to give you assets to purchase your home. When making an offer on a home the seller will want a good faith deposit. This is money that you give to the escrow company to be held until the property is ready to be transferred to you at sale. The seller wants to know you are serious and can ask for as little as .5% to 10%. Most commonly we see a minimum of $1000. That $1000 will be credited to you and will reduce the amount of money you need for your down payment and/or closing costs.
Typically if you do not receive or qualify for 0% down or any second mortgage or grant programs and you are a first time home buyer, you will need 3.5% of the purchase price plus closing costs to purchase your home. If you are purchasing a home for $150,000 you will need $5,250. This can be in your bank account, your 401k or retirement account, or can be gifted to you by an immediate family member. But that is not all you will need, there are the fees to pay the bank/lender, the title/escrow company, the notary, appraiser, pest inspector, etc...also, you will need to set up your impound account, the account that holds the funds to pay your taxes and insurance when due. These costs can reach 4-4.5% of the sales price (depending on time of year and current rates). That could be an additioanl $6750. Now, you can ask the seller to help you with closing costs, but there is no law stating that they have to.
Don't let these figures scare you, there are programs and loans available to help, but if you can start saving some of the money today, getting your loan in the future will be much easier. Contact me for more information and to get onto the road of home ownerhsip

Thursday, January 5, 2012

Step Two-Employment and Income

If you have had your credit pulled, or you know that your credit is good (over a 660 middle score from a mortgage source), then it is time to consider your employment and income. Investor's are looking for job stability. That doesn't necessarily mean you have had to be at the same company for the last 10 years, but they do want to make sure that if there has been any changes in the past two years that it was for good reason. If you just went from being a warehouseman to a car salesman, you will probably need two years of history before they will consider your income. But each case is different and you should talk to your lender about it. In the new conservative world we live in, it is best to take a two year average of your income. Now if that income includes Bonus or Overtime a written verification of income from your employer will need to be requested by your lender. The reason is that the overtime and bonus income has to be verified as usual and customary. A one time bonus or a season of overtime (that does not happen every year)will not be used to help you qualify.
Stay tuned for more "how to" information.