If you are planning to use an FHA loan, here is some important information you need to know.A property must be FHA eligible. That means it cannot have any “health and safety issues.” Your real estate agent should be able to advise you as to which properties will not qualify. This will save you a lot of time and disappointment. If your agent is not sure, s/he should consult with your lender. FHA does not require a pest report or section 1 clearance unless the appraiser makes negative comments about the property that would cause the lender to want to know more information. So, if your agent knows, going into the loan process, that there is going to be a potential issue, then s/he needs to make sure that it’s possible to get a section 1 clearance or to get the repairs done prior to the appraisal process.
In this market, where homeowners have to compete with the “fire sale” prices of bank owned homes, it more important than ever for homeowners to be realistic about their home’s values. It often is difficult for homeowners to objectively value their homes, which often reflects their sense of personal style. However, by consulting with a REALTOR®, using online resources, investigating neighborhood trends, and soliciting the opinion of friends, homeowners can arrive at a reasonably accurate appraisal. If they cannot accept the reality of the situation, I recommend that they wait for a more favorable selling climate. On the positive side, they will often more than make up the loss from the savings on their new purchase. It is important to have their agent help them “crunch the numbers” before making the final decision.
If they are having financial difficulties, it is critically important for them to consult with their real estate consultant to get accurate information on all their options and the possible consequences.
For mortgages, 620 is the new magic number
Near historic low mortgage rates, favorable home prices, and the federal tax credit for first-time home buyers have contributed to home purchases in the past year. However, the onset of the credit crisis, new regulations for home appraisals, and more stringent guidelines for purchases and refinances have resulted in confusion for some potential home buyers.
While using a mortgage broker to find the best loan may work for some buyers, it may not always be the best route. In the past, mortgage brokers could “shop” a loan to multiple lenders to help find the best deal. However, new practices and procedures under the Home Valuation Code of Conduct (HVCC) have hampered mortgage brokers’ abilities, namely that lenders may no longer accept home appraisals commissioned by brokers. As a result, consumers may have to pay for new appraisals with each lender, which costs time and money. However, consumers who are very busy or need guidance may find that working with a mortgage broker is the easiest solution.
Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past. Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs. Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage. However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income.
To save yourself time and money, be sure you work with an experienced mortgage broker who knows the latest changes in regulations and underwriting practices. A top-notch broker is able to anticipate potential problems and come up with solutions in advance so you can be confident that you will be able to finalize the sale. This affects seller’s also. Your agent should be sure that the buyer is working with a reliable broker.
If you would like a referral to some excellent local brokers, just let me know.
If you know me, you know that I’m not fond of political humor because so much of it vilifies people personally, instead of focusing on the issues and solutions.
However, this sketch from The Daily Show is very clever, not at all mean-spirited and really made me laugh.
It stars the U.S. Secretary of the Treasury, who can’t seem to price his home to sell. Welcome to my world Mr. Geithner!
http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation
Many thanks to Craig Forte, Real Estate Business Coach and Executive Editor of AgentInnerCircle.com for sending me the link in his Agent Inner Cirlcle Newsletter.
