Pete Cannon

What do you think of allowing the FHA to lend up to 110% of the current appraised value of an owner occupied home to solve the challenge that faces many homeowners. As values have slid many people are upside down and cannot refinance even though their credit and income may be sufficient for approval. How about a provision in the mortgage to prevent the person from refinancing for 2 or 3 years so they do not take advantage of the program. Do not allow cash out, just a refinance for people who have lost equity due to local market conditions out of their control. What do you think? Would it cost less than $700 billion?

Getting pre-qualified with a lender is more important than ever before as lenders have tightened credit. To get pre-qualified you need 2 years of taxes, current pay stubs, 2 months of bank statements and all retirement statements and brokerage account statements. If you are self employed an updated profit and loss statement will be needed. If you have had any late payments, a letter of explanation signed and dated describing any credit issues can also be included. The letter should indicate you had an issue, you resolved it and it will not happen again. You should not even look at houses until a lender has given you a document that says you can purchase a home. You will be in a better negotiating position with a pre-qualification letter in hand. To make an offer on a foreclosure listing the letter is required. Most agents will not show you properties until they are certain you can get financing. If you are coinsidering purchasing a home make an appointment with a lender today.

If you are currently renting try to pay by check and save receipts. If your employer offers a 401k retirement savings plan at work take advantage of it and set aside some of your income. Lenders like buyers to have reserves on hand. It shows stability. Life insurance with a cash value also counts as reserves. Old savings bonds that you may have forgotten about can play a role. Values of cars, boats etc. really don't add anything to the application when applying for a residential mortgage. Cash is king.

Many people I have spoken to lately have some ideas about the current credit crisis that is based on newspaper's, TV and the Internet that is not entirely accurate. Many feel you need 20% down to buy a home. You do not. You can purchase a home today with as little as 3% down. Many people feel the lending industry has ground to a halt. Lending continues. We continue to close loans. Many people blame loose underwriting for our present predicament. That may be true. The real problem is a lack of equity for many people. It is not so much the rate or type of mortgage but the fact that they cashed out their home too many times in a short period of time.

As appreciation has slowed, stopped or values have dropped people who purchased at the top of the market in the last 1-4 years and have no savings cannot sell and pay a 6% commission and cannot refinance because they have no equity and credit is tighter than when they purchased. As sales slowed there are fewer solds or comps to compare to so naturally it has a domino affect. If you like your house and do not need to move you do not have a concern other than gas prices, food costs and your future job stability. If you bought with little or nothing down recently and were counting on some above average appreciation you took a gamble and lost. Building savings and paying down your mortgage principal balance and increasing your earnings is really the only solution. We wish you the best of luck.

Oil prices skyrocketed Monday on fears of the 700 Billion Dollar Bank bail out. In Wisconsin some stations sold gas at $3.69 cash only. Credit card gas has been $3.80 to $3.89 a gallon lately in the Milwaukee metro area. A few weeks ago gas was as much as $4.19 a gallon here. The gas is E90 in the metro area and now as stations have switched to the winter blend the price has come down slightly here. According to reports today we could be seeing gas over $4.19 a gallon again soon.

Now that most of the kids are back to school and the Harley riders have left town it is time to go to work. The weather sure has been outstanding lately and it seems unbelievable that we have not hit 90 degrees at the Milwaukee Airport all summer. The heavy rains of June are just a distant memory now. The summer has been great. Election and Hurricane season are both here and with all the hot air it may not be a coincidence. Let's hope that the hurricane season passes uneventfully and who ever is elected can jump start the economy and provide hope and employment for those less fortunate.