Skip to content

Posts tagged ‘first time home buyer’

It’s official: Obama to direct FHA to cut mortgage insurance premiums

Finally, a positive change for those needing an FHA loan…

2015-01-07_1805
The Obama Administration is directing, via executive action, the Federal Housing Administration to reduce annual mortgage insurance premiums by 50 basis points, from 1.35% to 0.85%.

“…(T)oday, the President announced a major new step that his Administration is taking to make mortgages more affordable and accessible for creditworthy families,” according to a statement from the White House.

The White House statement says that the typical first-time homebuyer, this reduction will translate into a $900 reduction in their annual mortgage payment.

read full article via http://www.housingwire.com/articles/32533-its-official-obama-to-direct-fha-to-cut-mortgage-insurance-premiums

Advertisements

The Truth About Buying a Home: You DON’T Need 20% Down

2014-10-02_1549

In a recent survey, How America Views Homeownership, it was revealed that 68% of Americans feel that now is a good time to buy a home and 95% said they want to own a home if they don’t already.

Franklin Codel, head of Wells Fargo home mortgage production, explains:

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home.”

Confusion Creates Paralysis

However, the survey also reported that many are afraid to purchase a home because of uncertainty about “qualifying for a mortgage or navigating the home buying process”. Though 74% said they “know and understand” the financial process involved in buying a home, they also gave answers that suggest otherwise. For example:

•30% of respondents believe that only individuals with high incomes can obtain a mortgage
•64% of respondents believe they must have a “very good” credit score to buy a home
•44% believe that a 20% down payment is required

In actuality many of these beliefs are unfounded. Let’s look at the question of down payment:

Freddie Mac, in a recent blog post addressing the issue, confirmed that there is misinformation regarding the amount necessary when determining the down payment for a home purchase:

“Did you know 40 percent of today’s homebuyers using mortgage financing are making down payments that are less than 10 percent? And how about this: since 2010, the number of people putting down less than 10 percent for conventional loans has grown three fold. So, not only are low down payment options real, they represent a significant portion of today’s purchases.”

In a separate Executive Perspectives, Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management explained further:

•A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
•Qualified borrowers can further reduce the down payment coming out of their own pockets to 3 percent by lining up gifts from family, grants or loans from non-profits or public agencies.

Education is the Key

Boyle talked about the importance of educating potential buyers:

“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”

Codel agreed:

“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans.”

Bottom Line

If you are saving for either your first home or that perfect move-up dream house, make sure you know all your options. You may be pleasantly surprised.

via http://www.keepingcurrentmatters.com/2014/09/23/the-truth-about-buying-a-home-you-dont-need-20-down/

Top 5 Reasons to Buy a House Right Now

 

Buying a house is a highly individual decision—and a local one—but current trends are creating a favorable situation for many would-be homeowners.

Interest rates are low, employment is rising, home prices—in most markets—are still well below their peaks, and rents are through the roof.

Every family and each individual has various factors affecting the ability and the decision to buy a home. If you live in a market where studio apartments are $2,400 per month—while nearby condos sell for $300,000—it might make sense to buy a house instead.

Five Compelling Reasons to Buy a House Right Now

1. Interest Rates Are Still Low

Mortgage interest rates are still low—for now.

A 30-year-fixed-rate loan now averages 4.16%, according to Freddie Mac, but many economists believe we will see 5% rates next year. As interest rates increase, so do your monthly payments.

A $300,000 house at 4.16% with 20% down would have a monthly payment of $1,168. With a 5% interest rate, that payment increases to $1,288.

2. There’s More Inventory

As more houses enter the for sale market, prices stabilize.

Read more via: http://www.realtor.com/news/top-5-reasons-buy-house-right-now/?cid=eml-2014-08-snl-sub1_five_reasons-blogs_news&MID=2014_08_Newsletter_2013&RID=10250946

Suze Orman changes homebuying advice

Suze alert! Change of advice

Saturday, 7 Sep 2013 | 9:06 PM ET

A big change to homebuying advice that Suze has been giving viewers for years.

Now that we are seeing a rebound in the housing market, it is time for a new home buying strategy says Suze Orman. “Financial advice needs to change according to what is happening in the economy,” she says.

In today’s economy, with interest rates still low, relatively speaking, and home prices leveling out, Orman says potential homebuyers no longer need to make a down payment of 20 percent. “I’m fine if you can get a mortgage with 10 percent down,” says Orman. In addition, she still maintains that:

•You get a 30- or 15-year fixed mortgage

•You qualify for a 4 percent to 4.5 percent interest rate

•Your mortgage payment, property tax, insurance and PMI (private mortgage insurance), is equal to or less than your current rent

•Your job is secure

These rules shouldn’t be too hard to follow. Over the last three months, interest rates for a 30-year fixed mortgage have been hovering around 4.5 percent and the rates for a 15-year fixed mortgage around 3.6 percent.

Home prices are also expected to stabilize more so because investors, who have been driving up the home bidding, are expected to exit the market soon. According to a survey by ORC International, 48 percent of investors plan to curtail home purchases. (See Analysis: Waning investor demand opens door for first-time U.S. homebuyers)

While this is one of the best times to re-enter the market or get into the market, Orman says you must still be wise and make sure you have an eight-month emergency fund in case “something happens and you don’t have money coming in.”

See what else Suze Orman has to say every Saturday at 9 p.m. EDT on CNBC.

See more of “The Suze Orman Show”

—By CNBC’s Sakina Spruell. Follow her on Twitter @SakinaCNBC.

via Suze Orman changes homebuying advice.

Short Sales: Answers for First-Time Buyers | Trulia Pro

Short Sales: Answers for First-Time BuyersMarch 2, 2012

Many people in the market today are first-time home buyers who would not have been able to buy when home prices were higher. Enticed both by lower prices and bank promotions, these eager hopefuls are have taken the signs of deals as the best chance to make their first real estate move  .While all home buyers need help with the short sale process, it’s especially challenging to address the needs and concerns of a first-time home buyer who has decided a short sale is the home for them. Here’s how to get answers to first-time home buyers’ top three questions about short sales.

1. How long does it take for a bank to approve a short sale? This is the million-dollar question. While it takes an average of three to six months, the timeline – and the process – vary quite a bit from one bank to another.Short sale approval timelines depend on the bank some just take longer than others. While each bank has different short sale guidelines, the short sale has to make sense to the bank. The more sense the short sale offer makes to the bank, the faster the approval process.Here are some things that slow down the process by several weeks or more – these usually involve more people or more factors:Multiple liens on the propertyA third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys.  Private Mortgage Insurance PMI on the propertyAdditional investorsAction: To make an accurate prediction about the short sale timeline for a particular property, research the bank’s general timelines, the property’s liens, and whether there is PMI before writing the offer.

2. Will the bank make repairs to the property? The short answer is, probably not.Here’s why:The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.Many short-sale sellers do not have the financial means to make repairs.Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.Why wouldn’t a bank allow the seller to make repairs? your buyer may ask. A short sale is a sticky situation for a bank, and that the bank wants to avoid potential liability. For example, if the bank allowed the seller to make repairs and the repairs proved to be faulty, the buyer might potentially hold the bank liable, since the seller doesn’t have money which is how the short-sale situation came about in the first place.Action: Find out how the bank and the seller feel about making possible repairs. A short-sale buyer needs to understand that the home will most likely be sold strictly “as-is” and all repairs will be at their expense.

via Short Sales: Answers for First-Time Buyers | Trulia Pro.