The Road to Mortgage Ready Credit with Brian Short – The 22 page booklet carefully explains 1) What is good credit, 2) What is a Credit Score, 3) What improves your credit, and 4) Other Credit Issues which could keep you from qualifying for your upcoming home purchase or refinance loan. Down load this eBooklet for your use or forward to a friend or loved one who is considering a home purchase or refinance in the coming months.
Sgt. Joe Friday (Jack Webb) from 50's & 60's hit TV show Dragnet
Buying a home has always been a big decision. But for some people today it’s a difficult decision because of all the conflicting information coming from the media. To make matters worse, that information is often outdated…or even inaccurate.
If you know anyone who is thinking of purchasing a home this year, please share the following information with them:
FACT 1. Mortgage options are still plentiful for borrowers with good credit scores and documented income. All assets & income will need to be fully documented in most all cases for the past 2 years.
FACT 2. There are still programs available, like FHA, that allow as little as 3.5% down payment, and many others that allow less than 20% down. VA Loans still allow an eligible Veteran to buy a house up to $417,000 with $0 down payment!
FACT 3. Jumbo mortgages are still available on loan amounts even in excess of $2 million dollars.
FACT 4. Vacation/second home financing can be obtained with as little as 25% down, even with jumbo mortgages.
FACT 5. There are FHA Renovation (203k) Mortgages available which can be used to update or repair an existing home. Small projects (under $35,000) can usually be done in such a way where the homeowner or buyer can use up to one-half of this money upfront to purchase materials and then pay the contractor once the project is completed.
FACT 6. Senior citizens can use their current equity in their home and actually relocate and buy a house and have NO MONTHLY PAYMENT on their new home for the REST OF THEIR LIVES. The FHA Reverse (Home Equity Conversion) Mortgage can be used by those 62 years of age or older to refinance their currnet home or buy their idea retirement home.
FACT 7. As of today, rates on most mortgages are still at historically low levels when compared to the last 30 years. Every indication is that rates will likely begin to increase before the end of 2011 – so delay if low interest rates are desired.
FACT 8. Most homes are selling at a big discount relative to 5 years ago.
Make sure your friends and family know the facts! Owning the home of their dreams may not be as hard as they think. Send your friends and family this link and let them know I would be happy to meet with them and help them determine what options are available in their personal situation.
What else can you do to help you prepare for home ownership in the next 12 or 24 months? Work on these things:
1. Pay your bills on time. Utilities, cell phone, car insurance, student loans or other debt your are paying off quickly – make you payments on time and in full. Put them on an auto pay through your bank if you have your paycheck on an auto deposit. It all goes in and out every month – on time and in full – even if you are out of town, covered up at work or just distracted for some reason.
2. Keep your check book reconciled and up-to-date. This may seem unnecessary in the age of “online banking” but even the “best of us” forget to enter a debit card payment once in a while and it comes back to bite us where it hurts. Overdraft charges of $35-50 each will add up quickly and cause a blemish on your banking history when applying for a new mortgage in the months to come. Mortgage underwriters like to see very clean banking history and prefer to loan to those who demonstrate the ability to manage their money – no matter how much or how little they make.
3. Save some money for a down-payment and for your closing costs. Depending on the loan program you desire, you will need to save 3%, 5% or 20% of the sales price of the home you desire to buy. Any loan for which you qualify for more than 80% of the sales price will require a monthly mortgage insurance premium which will cost you $50-$250 per month depending on the size of the loan in addition to your monthly property taxes and home owners insurance payments.
FHA loans will let you buy a house with only a 3% down payment but you will have an up-front and monthly mortgage insurance premium figured into this loan. If you bring a 20% down payment, you will avoid this mortgage insurance premium. In addition, your closing costs and pre-paids will average about 3% of the sales price with most loan programs. Therefore, if you desire to buy a $150,000 house in 2 years and you want to use an FHA loan you should need $4,500 for your down payment and about $4,500 for your closing costs or a total of $9,000 to close the sale. That should give you a good goal to shoot for!
3. Keep your paperwork in order. You need to keep the following financial records. If you don’t have them, start keeping them – THIS WEEK!
a. Pay stubs – Keep in order for 1 year until you successfully file your tax return for that year.
b. Sales Receipts and Debit Card transaction receipts– Keep in an envelope or file folder for each month for the year until you have filed your tax return for that year. You may decide to keep them for as long a five years for warranty purposes for items you have purchased.
c. Bank Statements (Print off hard copies every month) – Keep in file folders in order for 5 years. The IRS can audit you for any year for the past 5 years.
d. W-2’s and Tax Returns– Keep until you die. (Let your kids or grand kids throw these away.) Do not throw away you tax returns – always keep a copy of the exact return you filed with the IRS. I keep an electronic (pdf) copy and a hard copy.
e. Insurance documents – Keep your most recent copy of your health insurance, auto insurance and renter’s insurance in their own file folder in your file cabinet for easy reference.
f. Auto service receipts– Keep all of you oil change, tire purchase and auto repair receipts in the glove box of your car along with your insurance card and annual registration if there is room. It your glove box becomes too full, start a separate file for this information. You will need this information for warranty purposes and for documenting the service on your car if you ever sell it someone who wants to know how well you have taken care of it.
These simple habits, developed early in your adult life, will help you be a stellar mortgage applicant and allow you to qualify very soon for the best possible mortgage loan programs available.
There seems to be a rush to bail out, yet, another industry. Banks, Insurance companies, Fannie and Freddie and now, the “Big Three” auto makers. How can this be “good” for our country and economy?
The mortgage industry applauded the bailout of the GSE’s (government sponsored enterprises) Fannie Mae and Freddie Mac. They were already quasi-government agencies with directors and CEOs appointed by Congress (for better or worse!). Unlike the insurance industry, no other company – government run or private – does what they do. Unlike the auto industry, no other company – domestic or foreign – keeps our banks fluid and the housing market flowing. Without Fannie and Freddie the wholesale banks, which buy the mortgages originated by mortgage brokers, would have no more money to fund the new loans. Fannie and Freddie were put in place by the federal government to keep the market fluid.
The Federal Government determined, over fifty years ago, that fluidity in the housing market was the key to keeping Americans buying their homes. This strategy has worked for our country for the past several decades and has given this generation unprecedented opportunity to own a house (or two) when our grandparents seldom owned property and certainly did not buy without a 25%-30% down-payment.
Fannie and Freddie (whether there should still be two of them is a topic for another day!) have played a key role in the “ownership society” announced by President Bush nearly 8 years ago prior to this recent unprecedented growth in home ownership among all Americans – including minorities, women and young people. No one else has done or could do for our economy what Fannie and Freddie have done in giving Americans ownership, equity, property and a vested interested in a community.
So, many are now saying, “let’s take all hurting industries to the Feds and let them bail them out, too!” Insurance companies (AIG is back for a SECOND round?!?), Wall Street Banks, the Auto Industry…. Why stop there? Circuit City just announced the closing of 155 stores and that they will ask for Chapter 11 protection from their creditors as they reorganize and attempt to restructure their debt. We’re losing our Circuit City (only 4 months old!) in the city where I live.
Other retail chains are hurting, as well. Starbucks was in the news earlier this week for posting a worse than expected earnings report. Starbucks recently forced the closing of a Saxby’s coffee shop in our humble city when they built theirs one block away from the newly finished Saxby’s. Is the over-priced coffee industry hurting and should the Feds step in a bail out the Grande’s, Latte’s and Espresso’s of the world because many teen-aged multi-pierced, messy-haired servers and “Espresso-Masters” will be displaced? I tend to believe that, as John McCain took a beating for saying, the fundamentals of the US economy will work themselves out – in the insurance industry, the banking industry, the auto industry and, need I say, the gourmet coffee industry. We must let the free market do its work and not let the Feds try to convince us that they know how to run a business and to micro manage these selected industries and our economy.
Is the mortgage industry really that different? YES. When it comes to competition and product availability, the secondary market of the mortgage industry is very different. Fannie and Freddie play a role that no other private or foreign company or agency play and that is why it is not inconsistent to support the limited propping up of Fannie and Freddie (already quasi-government agencies) and be opposed to the Federal government picking and choosing which private company or industry to bail out. Unions have made the US auto industry what they are today – unresponsive to market changes, overpriced, less efficient, dependent on foreign fuel, and not environmentally friendly. The US auto industry must change at their core or they deserve to fade into the history books along with their union-thug bed-fellows.
After a wave of opposition and a petition drive that cited views deemed racist and offensive against Africans, a statue of Indian independence leader Mohandas K. Gandhi was removed this week from a university campus in Ghana, reports said.