You Don't Need Perfect Credit to Buy a Home Today

Daily I hear in the media that Banks are not lending and you need to have Perfect credit to get a home loans. This is not true. Yes, minimum requirements have gone up, but when I look at what is actually takes for a First Time Home Buyer or a average person to get a loan it is not much harder. I think the general public remember 2005 when anyone could buy a home or refinance. Back then borrowers who had credit issue and lower credit scores did not want to wait to improve their credit scores because if they waited a month to improve their credit scores the home they wanted to buy was already off the market and the next property sales price went up 5%.
I think back to how easy it was back in 2005 to get a client a loan and think about the clients I have not been able to approve today. With respect to credit I do not see this to be as big of an issue as you might think. Most of the people who are not being approved today could not have been approved in 2005. Borrowers have to wait today if they have credit issues and I counsel them to improve their credit scores. This process can be as quick a a week or up to several months but it is worth it when the borrowers can get the best loan for them. Credit scores are forgiving given there is some time from when delinquencies are reported. Borrowers today are much better at knowing their own credit scores because of the online credit tracking and fraud prevention programs. Anyone who is thinking about buying a home or refinancing in the next year should talk to a Loan Officer and review there credit. We all know having the good credit scores is important, but knowing how your credit scores are effecting your borrowing power is more important.
Here are a few quick tip that can improve your scores.
Pay your bills on time
Keep credit card balances under 30% of the credit limits
Don't open new credit cards to take advantage of 0% offers. Reed the fine print of those offers to see what "transfer fees are"
Don't have more than 3 credit cards
Don't Co Sign For Anyone. unless you are controlling the monthly payments and you are making them.
Try to avoid using 'Finance Companies'

Home Value Issues

Do you know what your home worth? Well our definition of worth is different from what lenders think worth is. I use to say a home is only worth what a person would pay for it. Now I only look at the value of a home as what properties around it have sold for and that includes Foreclosed and Short Sale Homes. In the last year appraisers have started including properties that are foreclosures and short sales in as comparable values in the appraisal report. Foreclosures and Short Sales were the exception in the past but now they have become so common that they are driving down the values of home all around them. Since an appraisal is a report of what a property could sell for or what some one would buy the property for we have to see the effect of all properties that are being sold in the area. If you were selling a home that was identical to a home a bank was selling for 20,000 less your home, your home over priced.




Many people think just because a home was a foreclosure it should not be counted in the values of home that are being sold naturally. The fact, and a sad fact is why would a buyer spend more on your home when they can buy an identical home for less from a bank. Buyers are looking for the most value today. Not all foreclosed homes are run down and beat up.




If you’re not selling your home in the next 2-3 years I would not look at your home as an investment. Too often we looked at homes an investments tool and not what it really is. For most homeowners a home is just that, a HOME. A place to live and raise a family. I am not saying a home can not be an investment but I sleep much easier when I look at my home as a good sound place to live and not like my 401k, or lack of 401k.

FHA Loan limits have been raised!!!!

Today FHA increased loan limits in most counties. In Pima and Maricopa counties, loan limits were raised. This is a very positive sign from FHA that will allow FHA borrowers to buy or refinances larger loans. The housing market should see some positive movement because of these increase. FHA loans have very low fixed rates and do not have as many restrictions as conventional loans do at higher LTV’s (Loan to Values). Pima’s loan limits were raised to $316,250 and Maricopa’s was raised to $346,250


Now in Pima county, a buyer can take advantage is FHA financing that only requires a 3.5% down payment. With a minimum of 3.5% down payment a buyer can purchase a $327,720 home which is up from $280,880 under the old guidelines.


Please check out the link below for a list of all counties.


https://entp.hud.gov/idapp/html/hicost1.cfm


If you’re ready for a FHA loan apply here.

Fannie Mae’s HomePath Program

BEST CONVENTIONAL LOAN OUT THERE FOR BANK REPOS



Fannie Mae’s HomePath programs is a wonderful loan program to help home buyer get great financing on property for sale by Fannie Mae. Borrowers have the option of No Money Down or as little as 3% down payments for these homes. For investors and 2nd Homes only a 10% down payment is required. There are NO APPRISALS and the loan and NO MORTGAGE INSURANCE on these loans even without 20% down... Rates for these loans are low conventional fixed rates.


YES, NO APPRAISAL AND NO MORTGAGE INSURANCE.

Fannie Mae accepts the value of the home as it is and bases the loan amount off of the sales price. No more guess work for what the home is going to appraise for or if there are going to be any problems with the appraisal. I hope everyone understands how important this is. No Appraisal on a purchase with little or no money down is unheard of.


Most buyers who are looking for a great value in a homes look at Bank REPO’s. One major draw back to Bank REPO’s is the conditions these properties are in and the problem with the appraisals. Since Fannie Mae will be financing these homes, they are comfortable with the value and DO NOT REQUIRE AN APPRAISAL!! In today’s market not having to do an appraisal is a HUDE ADVANTAGE in buying a home.


No Mortgage Insurance for these loans is another advantage of this financing. Mortgage Insurance can add hundreds of dollars to your monthly payment. In Arizona it is almost impossible to get conventional financing with only 3% down. The reason for this is the Mortgage Insurance companies are not offering mortgage insurance for loans with less than 5% down, 95% Loan To Value Loans. Buyers of these HomePath homes will not find any better Conventional, VA, or FHA financing!!!


For those buyers who can receive a Community 2nd Mortgage, the HomePath Financing will allow a 2nd mortgage to pay all of the down payment and closing cost not to excide 105% of the sales price. Expanded interested party contributions allow up to 6% of the sales price. This makes it very affordable for buyers. Buyers can actually put no money down from their pocket and move in with 100% financing with NO MORTGAGE INSURANCE.


A list of home that Qualify for this Great Program is available at www.HomePath.com Currently in Tucson there are 156 homes for sale ranging in price from $35,500 to $319,900. In Phoenix there are 830 properties, and in Sierra Vista there are 5 properties. I am not a real estate agent but I looked at the pictures of these home and compared to the property I have see from other Bank REPO’s, these are by far nicer looking properties. This opportunity should be looked at by all buyers in today market.

If the $7500 tax credit was not good enough, It looks like a $15,000 tax credit is on it way..

The Senate has passed a bill the would give a $15,000 tax credit to buyers of a home this year. Last year there was a $7500 credit for first time home buyers (anyone who has not owned a home in the last 3 years). The $7500 tax credit would be paid back over the next 15 years. They new Tax Credit is up to $15,000 or 10% of the purchase price of a home purchased as a primary residence. The House may limit this to lower-incomers before the Bill is sent over to Obama to sign. The new Tax Credit will not be limited to First Time Home Buyers. This will help homeowners who want to buy up or down take advantage of this credit. It is hoped that this will give a jump start to the housing market and lower the supply of homes. Home owners could take advantage of this tax credit to buy an affordable home and with the $15,000 do many upgrades and improvements to the home to increase the value. Local companies and small business will benefit the most from this tax credit money when home owners spend it on their homes. This is the shot in the arm the housing market needs.

Refinancing with NO Equity

Today there are many homeowners who could benefit from the great low rates but feel they can not because of a lack of equity. Homeowners should know there are many options available to them for refinancing without equity. Depending on the type of the loan you have there are options to look at.


Homeowners with FHA and VA loans.

FHA and VA offer refinancing options for homeowners without having to go through the whole loan process. FHA offers the FHA Streamline Refinance. The streamline lets the homeowner refinance the balance of their current FHA loan into a lower rate loan without an appraisal, without proof of income or employment. Current Home Values do not matter!! Customer who can drop their rate by .5% or more should look into this option. Most lenders do not charge any origination fees and most times cover other closing cost. FHA borrowers will receive a refund of the previous up front mortgage insurance and on the new loan normal up front mortgage insurance will be charged. VA offers the Interest Rate Reduction Refinance Loan (IRRRL). This is very similar to the FHA streamline. The main difference is the VA IRRRL only charges a .5% funding fee.


Homeowners with 80/20 combo loans

Again we will take advantage of a FHA loan to refinance the 1st mortgage and leave the 2nd mortgage where it is. Many homeowners purchased homes in the past with the 80/20 combo loan to avoid mortgage insurance. Many of these 80/20 combo loans had adjustable 1st mortgages and a fixed rate 2nd mortgage. Since FHA allows for you to refinance the 1st mortgage up to 97% Loan to Value and still have a 2nd mortgage, this is a wonderful solution for homeowners. Your home does not need to appraise high enough to cover the 2nd mortgage. Here is a common example.

Homeowner has an 80/20 combo loan. They purchased the home for $100,000. Their 1st mortgage is for $80,000 and the 2nd for $20,000. Their rate for the 1st mortgage was 7.00% adjustable and the 2nd was 8% fixed. Today their home will only appraise for $90,000. We would refinance the 1st mortgage balance into a fixed rate at 5.125% today and ask the 2nd mortgage to subordinate their 2nd mortgage. In simple terms allow us to redo the 1st mortgage with out paying off the 2nd mortgage. If the 2nd mortgage company will allow this, it will be the best solution to having a high rate adjustable 1St mortgage. Since the 2nd Mortgage is a fixed rate and there is no equity in the property to pay off the 2nd mortgage, it is not important to refinance the 2nd mortgage as it is the 1st mortgage.


Before you give up on refinancing because you don’t think you have equity, call your loan officer and ask them about these options and other options that may be available to you. It may save you thousands of dollars in interest.

Helping your college student buy a home? FHA is your lender

With current house prices being at 10 years lows, many parents are finding it cheaper to buy their college student a home while they are in college. Formally know as the “Kiddy Condo” loan FHA allows for a minimum of 3.5% down payments for these loans. The Parent and Student are both on the loan and have title to the home. They Student must have sufficient credit and must be enrolled in school in the area of where the home is being purchased. The parents must also qualify for the loans and prove they can afford the new payments for the home.


FHA rates are currently in the low 5’s for fixed rate mortgages. The low rate in combination with the minimum down payments makes the FHA loan very attractive to buyers. I recently financed a home for a college student and parents who were paying rent for a house. They purchased a $160,000 home near the University of Arizona campus. Their total payments were under $1100.00. This was very attractive because next year their other child is going to the University of Arizona and will be living in the home.


Buying a home right now is a great investment in college student’s futures as home owners. After the school year many home around the University area will go on sale. It is smart to be pre approved for this loan before you go shopping. FHA has changed their guidelines for these “Kiddy Condo” type loans last years and you should work with a loan officer who is experienced in these transactions. While you can not count income from roommates to qualify for these loans, many clients rent out a room to off set the cost of home ownership. These loans are not for investments properties, the student must live in the property.


With FHA rates under 6% and currently near 5% parents who have these types of loans or any FHA loan should take advantage of the FHA Streamline refinance which allows the borrowers to refinance the balance of their loan to a lower rate without a new appraisal or going through the whole underwriting process. Take advantage of these great rates on FHA loans today.