Happy Holidays!  Are you in the market to buy a new home or investment property?  Are you saying to yourself I will start looking again after the new year? 

This is the best time of year to negotiate a offer with home sellers substantially lower than the list price. 

Charlene Grant, Broker Associate

Century 21 Pacesetter Realty, Inc., 325 E. Route 72, Manahawkin NJ 08050

Cell: 609-312-6625    

Email: CharleneGrantRealtor@yahoo.com

How Much Can You Afford?

Understanding how much you can afford is one of the most important rules of home buying. Depending on your individual situation, your budget can affect everything from the neighborhoods where you look, to the size of the house, and even what type of financing you choose.

Bear in mind, however, that lenders will look at more than just your income to determine the size of the loan. Likewise, you may find that there are some creative financing options that can help boost your purchasing power.

Loan prequalification vs. preapproval
One of the best ways to determine your budget is to have your real estate agent or lender prequalify you for a loan. Prequalification is different from preapproval, because it is only an estimate of what you'll be able to afford. On the other hand, preapproval is a more formal process where a lender examines your finances and agrees in advance to loan you money up to a specified amount.

What factors are important to lenders?
Banks and lending institutions will use several criteria to determine how much money they'll agree to lend. These include:

• Your gross monthly income
• Your credit history
• The amount of your outstanding debts
• Your savings--or the amount of money you have available for a down payment and closing costs
• Your choice of mortgage (i.e. 30-year, FHA, etc.)
• Current interest rates

Two important ratios
Lenders also use your financial information to figure out two, very important ratios: the debt-to-income ratio and the housing expense ratio.

• Debt-to-income ratio
  Many lenders use a rule of thumb that the amount of debt you are paying on each month (car payment, student loan, credit card, etc,) shouldn't exceed more than 36 percent of your gross monthly income. FHA loans are slightly more lenient.
  
  
• Housing expense ratio
  It is generally difficult to obtain a loan if the mortgage payment will be more than 28 to 33 percent of your gross monthly income.
  

Down payments make a difference
If you can make a large down payment, lenders may be more lenient with their qualifying ratios. For example, a person with a 20 percent down payment may be qualified with the 33 percent housing expense ratio, while someone with a 5 percent down payment is held to the stricter 28 percent ratio.

Other ways to improve your purchasing power

• Gifts
  If you're having trouble saving money, many lenders will allow you to use gift funds for the down payment and closing costs. However, most lenders require a "gift letter" stating the gift doesn't have to be repaid, and will also require you to pay at least a portion of the down payment with your own cash.
  
  
• Negotiating Closing Costs
  Through negotiation, some sellers may agree to pay all or most of your closing costs (for example, if you agree to meet their full asking price). If you choose to try this, make sure to ask your real estate agent for advice.
  
  
• Loan Programs
  Many local governments have special loan programs designed to help first-time homebuyers. Loans may be available at reduced interest rates, or with little or no down payments. Check with your local housing authority for more information.
  
  
• Loan Types
  Some homebuyers choose Adjustable Rate Mortgages (ARMs) because of low initial interest rates. Others opt for 30-year loans because they have lower monthly payments than 15-year loans. There are significant differences between different loans, so make sure to discuss the pros and cons of different loans with your agent or lender before making a decision.

Home lookings and home buying dreamers.  You only have 65 days left to take advantage of the $8,000 first time home buyer tax credit in which you can deduct from your 2009 income taxes.   Also, have you owned a home in the past and sold it and rented for the past 3 years?  Guess what, you qualify as a first time home buyer again. 

There are many mortgage programs available for you with FHA 3.5% down and USDA 100% financing.  In todays market you can also negotiate the sellers to pay your closing costs.

Home prices are dropping and now is the time to make an offer.  Call me for a home buying consultation and let me assist you in the emotional roller coster of the transaction of purchasing your first home in Manahawkin New Jersey at the Jersey Shore. 

As of today in Manahwkin, NJ there are 50 properties in the price range of $100,000 to $250,000.  Email me today for a list of those homes.

Charlene Grant, Realtor Associate

Century 21 Pacesetter Realty Inc.

325 E Route 72

Manahawkin, NJ  08050

Cell 609-312-6625

Mortgage Disclosure Improvement Act of 2008 has provisions that are going into effect July 30, 2009.

Do you have a pending sale or listing that was done before this time? Have your attornies (if they are not aware of this new provision) re-check all third party figures with a preliminary HUD a good 1-2 weeks before closing to get to your mortgage rep or broker so the loan package can arrive on time or this could delay your closing date 7 days!

The 3/7/3 Rule requires a seven business day waiting period once the initial disclosure is provided before closing a home loan (business days are everyday except Sundays and Holidays). This means that before a borrower can close on a transaction the borrower must receive the initial Good Faith Estimate and initial Truth in Lending statement disclosing the final Annual Percentage Rate (APR) seven days prior to closing.

If the final annual percentage rate APR is off by more than .125% from the initial Good Faith Estimate disclosure then the lender must re-disclose and wait yet another 3 days before closing on the transaction.

Charlene Grant, Realtor Associate

and Mortgage Consultant with Your Mortgage People, 925 Lacey Road, Forked River NJ Call me today for a quick free and easy Pre-Qualification.

Century 21 Pacesetter Realty Inc.

325 E. Route 72

Manahawkin, NJ 08050

ShopJerseyShoreHomes.com

Cell Anytime: 609-312-6625