It is very important that you get pre-approved before beginning your search for your new home. This statement holds true always, but is especially important in today's credit tightened mortgage market.
I spoke with a prospective customer the other day who had found a home that he wanted to purchase with his wife. They have always rented and were tired of not building equity and throwing their money away renting. This makes sense. He called me and, after speaking with him and taking an application it sounded like there would be no issues. Well, after pulling his credit I had to inform him that he did not qualify to purchase this home based on his credit.
Nowadays, banks are stricter in terms of debt ratio (your gross income/proposed housing payment including taxes and insurance) and credit score than in prior years. I don't necessarily think this is a bad thing. They want to make sure that you have a history of paying your bills on time and that you can afford the new housing payment so they won't need to foreclose. It makes sense.
So that you don't have your heart broken when you think you're going to purchase your dream house, have a reputable mortgage banker/broker take an application and pull your credit and issue you a pre-approval. This way you know that you will have the financing to act when you find that great deal in today's depressed real estate market.
I read an article yesterday on MarketWatch.Com that basically summed up some of what I've been telling my customers of late. Rates were very low -- below 5% for a 30 year fixed rate mortgage -- a few weeks ago. People wouldn't commit to 4.75% because they wanted 4.5%! Then, some good (albeit bogus in my opinion) news about the economy was released and interest rates spiked. Those customers who could have gotten 4.75% were now getting 5.75% or 6%. There's a lesson there somewhere!
Well, rates have been bouncing around the last week or so. We're at 5.5% today for a 30 year fixed. According to the article, experts are predicting that rates will drop from where they are today and they actually predict that we could see rates drop below 5% again. This is obviously no guarantee but it makes sense. In my opinion, the economy is still in a shambles and there is really no inflationary pressure to push rates higher. It's important for rates to stay low to help jump start the economy.
Anyway, the article went on to say that you customers -- home buyers and people looking to refinance -- need to be ready for when the rates do begin to fall. It takes much longer than it used to to close on a mortgage. Banks are shortstaffed (because of lay-offs) and the ones still standing are actually overwhelmed with files. And, the banks won't even look at your file unless it's complete. You need to do the following:
If you aren't prepared, you may miss the next interest rate reduction.
There's been a lot of talk about the $8000 Tax Credit for First Time Homebuyers. This is a terrific incentive and actually isn't only for First Time Homebuyers. You just can't have owned a home in the last 3 years.
The credit can be claimed on 2008 or 2009 tax returns. Homebuyers who get a loan backed by the Federal Housing Administration can use the money to cover closing costs and other fees.There are some creative tax planning strategies that the buyer can employ as well.
The tax credit, for home purchases made through end of November, comes with income thresholds, $75,000 for individuals and $150,000 for joint filers. After those limits, the credit begins to phase out. If you bought a home this year and expect your 2008 income to be lower than next year's, it makes sense to file for the credit this year using a 2008 amended return.
However, if you think your income will decrease, due to job loss, wage cuts or hour reductions, it makes more sense to file for the tax credit on your 2009 tax returns to get the most out of the credit, Meighan said.
Another benefit to waiting until you file your 2009 return is that you can increase your take-home pay. By taking the credit next year, you can change your tax withholding status with your employer now and get more on a paycheck-to-paycheck basis.
You'll be giving up a "fatter" tax refund next year, but each month you'll have more change in your pocket.
Also, don't forget to reduce your federal and state tax withholding to account for the tax deduction you can take on the mortgage interest and property taxes you pay.
Last month, the FHA said its borrowers can receive advances on the $8,000 first-time homebuyer tax credit from lenders, so they don't have to wait to get the money next year from the IRS. Borrowers will still have to come up with the FHA's required 3.5 percent down payment, but the advance from the tax credit can be applied toward closing costs, fees or to increase the down payment.
I read an article this morning on Time.Com that is pretty ominous for NYC (and surrounding areas) homeowners. Deutche Bank has come out with a real estate forecast, saying they believe that home prices in the NY metropolitan area, including Westchester County and Northern NJ, will decline an additional 20% before bottoming out. NYC home prices are already down almost 20% from their 2007 high. The main ingredient for this forecast is affordability. The median house price has dropped from $552,000 in 2007 to $446,000 currently, which is still quite high. Particularly with the economic issues we're going through, and the loss of financial jobs in the NY area.
Real estate prices operate on the simple premise of supply and demand. There are many more houses listed for sale than qualified buyers looking to purchase. In many cases, those qualified buyers need to sell their existing home first, which compounds the issue.
Who knows if this forecast is accurate or not? I don't know. It makes logical sense. The low mortgage interest rates have been helping some, but the tight credit guidelines and appraisal review process at the banks are hindering any substantial rebound. I still think this is a good time to buy. Money is cheap and the market will turn around at some point. If you are considering refinancing, I would get off the fence and do it now while you still have equity. If Deutche Bank is right, a 20% decline from today's prices will suck every last bit of equity from the few who still have equity after the refinance boom of a few years ago and the days of 100% financing.
I heard a story over the weekend that is becoming more and more common. People hear on TV or read on the internet that they should call their current mortgage lender to have their mortgage modified. A modification may be to have their interest lowered to current rates, lengthen the term of their mortgage in order to lower their payments, or fix their interest rate if they currently have an adjustable rate mortgage.
So, the customer calls their lender and gets a customer service rep who says that they can't even consider modifying their loan because they are not currently delinquent. They need to actually prove they are struggling by missing payments before the bank will consider a Loan Modification.
Well, I'm not sure this makes sense! But, the customer does as they are told and doesn't pay for 2 months. They are just doing as instructed. Then, their lender sends them a Notice of Foreclosure! They call for a modification and the lender tells them that they can't modify a loan that's currently in foreclosure.
These people have obtained an attorney and are working on sorting everything out.
Another situation is a customer of mine who, 2 years ago, was refinancing their loan with another bank. The loan officer told her that she didn't have to make her mortgage payments since she was refinancing. She could save some money. Well, according to the credit report, the refinance hit some sort of snag and took 3 months to close. Her credit now shows a 90 day late payment, which in today's tight credit market is a hinderance for her getting a new loan -- even though it was over 2 years ago.
Moral of the story...keep making your monthly mortgage payments no matter what anybody tells you.
Experienced, full-time mortgage banker/broker specializing in Purchase, Refinance, and Reverse mortgages.
I am an experienced mortgage professional with Guaranteed Home Mortgage Company. Guaranteed is a well capitalized mortgage banker/broker and has been in business since 1992. I am currently working out of our home office in White Plains, NY.
I have over 20 years of experience in the financial services field. That experience helps to set me apart from my competition. I am able to review your overall financial picture and and provide expert advise, using a mortgage loan as a financial tool. I pride myself in being able to place the loans that most of my competitors cannot.
I am a committed and passionate professional who puts my clients' best interests and satisfaction above all else. My determination to cater to my clients' specific needs coupled with market expertise, attention to detail and superior negotiating skills allows you to receive first class service.
I believe that the most important part of my job is communication. I take ample time during our first meeting, either in person or over the phone, to discuss and explain all of your options. After our initial meeting, you can count on the fact that I will keep you informed and updated through every step of your transaction.
I graduated with a Bachelor's Degree from the University of Scranton a "few" years ago. I live in Pawling, NY with my 2 great (most of the time!) kids, Griffin and Madison, and our dog Lexi. In my free time, I enjoy playing golf, guitar, and cooking.
We are licensed in 30 states, with my focus being on Dutchess, Putnam and Westchester Counties in NY.
"Thank you so very much. Everything did work well and we did indeed miss seeing you. We are extremely thankful to you for the gift, it was indeed a WONDERFUL SURPRISE. We appreciate not only your assistance throughout the process; but, we are grateful for you supporting us for all this time. If we ever hear of anyone seeking assistance in buying a home, we will not hesitate to say your name. Thank you kindly." Suzanne W.
"Steve, all went well with the closing, much smoother than the closing on my house (with another loan officer). I will certainly keep you in mind if I hear of anyone looking for a mortgage. Thanks again." -- Dora R.
"Hi, Steve -- Thanks so much for your help! No problems, everything went very smoothly at the closing." -- Scott S.
PS: Referals are the best Thank You I can receive!
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