Pre-Qualifying for a Mortgage

One of the first steps to take as a potential home buyer is to get pre-qualified for a loan. This step helps both you and your lender learn just how much home you can afford. And you should begin this process before you even start looking for a home.

According to the Federal Housing Administration (FHA), their pre-qualification essentials include:

• Having a steady employment history, at least two years with the same employer.

• Consistent or increasing income over the past two years.

• Credit report should be in good standing with less than two thirty day late payments in the past two years.

• Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.

• Any foreclosure must be at least three years old with good credit for the past three years.

• Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.

Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.

Why is this important? In recent years there has been a “mortgage crisis,” where the industry was rampant with fraud and with loans that put homeowners into situations they could not afford. As payments rose, homeowners found themselves unable to meet their monthly obligations. According to Realtytrac.com and their U.S. Foreclosure Market Report, in January 2010, one in every 409 households in the country had received a foreclosure filing.

Since pre-qualification for a home loan typically costs you nothing, but gives you both a goal of what homes are in your affordability range, as well as how much money you should look to have saved for a downpayment, you can hardly wait to take this step.

What if the home you want is out of your reach? Experts recommend reducing your debt and saving up a larger amount for your down payment. Let's say your dream home is $225,000, but you only qualify for a $180,000 loan. If you have a downpayment of $45,000, then you are ready to make a move!

During the pre-qualification process, you will be expected to provide the following information:

• your gross monthly income

• your total monthly payments (car payments, credit cards minimums, child support payments, student loan payments, any other monthly debts)

The lender will be looking to see that your debt to income is below about 40 percent, and the lower the better. So, if you are looking to buy in the near future, be sure to talk to your lender soon! 

Written by Carla Hill
March 8, 2010 Published on Realty Times

Thinking about Buying or Selling? 
Call Alvin's Team Today! 877-651-7810 
Or visit our website: www.LivingLakeTahoe.com

How Mortgage Rates Compare

You've heard it all across the media. Interest rates are at historic lows. If you are new to the mortgage process, these figures and statements give you little frame of reference.

Let's take a moment to look at where interest rates have been over the last few decades, and what today's rates really mean for homebuyers.

Interest rates are affected by a gamut of factors.

According to the Federal Reserve Bank of New York, "Lower interest rates make it easier for people to borrow in order to buy cars and homes. Purchases of homes, in turn, increase the demand for other items, such as furniture and appliances, thus providing an additional boost to the economy. Lower interest rates mean that consumers spend less on interest costs, leaving them with more of their income to spend on goods and services."

And this is, after all, what you want people to do in a down economy. You want them to reinvigorate the economy with spending.

The Fed continues, "If the rates that consumers and businesses have to pay to borrow rise too rapidly, however, spending may decline, leading to an economic slowdown."

So, it is a intricate dance the powers that be must perform in order to steer the economy the best they can. They, namely the Federal Reserve and Banks, are seeking stable prices, high employment rates, and sustainable growth in the economy.

30 years ago, in 1980, when many first-time home buyers parents were making home purchases, Freddie Mac reports that the 30-year fixed rate mortgage hit a staggering 16.32 percent.

Let's compare that in relation to today's interest rate, averaging around 4.5 percent.

• In the most basic terms, a 30-year fixed-rate mortgage for $100,000 at 16.32 percent, will cost you around $1,450 a month.

• For the same mortgage at a 4.5 percent rate, you'll be paying $580 a month.

The difference is astounding, and this is the main reason the media is shouting news about interest rates. If you are in the position to buy, now could very well be the time. 


Written by Carla Hill
August 26, 2010 

Thinking about Buying or Selling? 
Call Alvin's Team Today! 877-651-7810 
Or visit our website: www.LivingLakeTahoe.com

Social Benefits of Housing

Recent research from the National Association of Realtors (NAR) outlines the importance of homeownership's relationship with the economy, but of the social benefits it provides.

NAR reports, "The economic benefits of the housing market and homeownership are immense and well documented. The housing sector directly accounted for approximately 14 percent of total economic activity in 2009."

What sorts of social benefits are provided through homeownership?

According to the study entitled, "Effects of Homeownership on Children: The Role of Neighborhood Characteristics and Family Income", teens from households of homeownership have a higher rate of staying in school than teens from rental households. In addition, daughters of homeowners also experience a lower rate of teen pregnancy.

In terms of education, in the study, “Measuring the Benefits of Homeowning: Effects on Children,” there have been significant findings that homeownership has a strong positive effect on educational achievement.

The NAR report goes even further to show that "the average child of homeowners is significantly more likely to achieve a higher level of education and, thereby, a higher level of earnings."

Homeowners deal daily with issues pertaining to home maintenance and financial responsibility, something NAR research shows teaches children "life management skills."

Studies have also found that homeownership increases the amount of civic participation in a community. This is due in part to homeowners feeling that they have a higher, more permanent stake in their community and its issues.

For example, a study by Glaeser and DiPasquale found that 77 percent of homeowners said they had at some point voted in local elections, compared with 52 percent of renters.

In addition to these great social benefits, higher levels of homeownership have shown to reduce crime rates in communities. "Homeowners have a lot more to lose financially than do renters. Property crimes directly result in financial losses to the victim. Furthermore, violent non-property crimes can impact the property values of the whole neighborhood. Therefore, homeowners have more incentive to deter crime by forming and implementing voluntary crime prevention programs." (NAR)

For more information about these studies, please visit Realtor.org. 


Written by Carla Hill
August 19, 2010 

Thinking about Buying or Selling? 

Call Alvin's Team Today! 877-651-7810 
Or visit our website: www.LivingLakeTahoe.com

Buyers: Why Green is Worth It

For new and existing home buyers alike, the options to "green up" homes abound.

Green upgrades on homes offer two-fold benefits. They contribute to a healthier environment, both now and in the future, and they can save homeowners big when it comes to energy costs.

How much impact does a green home have on the environment, you ask? The government reports that “Energy Star qualified homes built in 2009 are the equivalent of:

• Eliminating emissions from 51,645 vehicles

• Saving 312,399,672 lbs of coals

• Planting 85,372 acres of trees, and

• Saving in the environment 612,678,574 pounds of CO2.”

Many homebuyers shy away from green construction and green upgrades because of the upfront cost. But while some estimates have put the construction cost difference at 17 percent, recent estimates from The World Business Council for Sustainable Development put the cost of green construction only 5 percent higher than traditional.

Green building means using recycled, renewable, and native building materials. It also means tapping into the energy sources that nature has to offer, including solar and wind.

Here are a few ideas of simple “going green” ideas to get you thinking.

Energy Star Appliances: Appliances are an easy way to make a home more friendly to the environment. One of the fastest ways to explore your options is to visitenergystar.gov. At this government site you can find our more information on tax credits and rebates. As an example of Energy Star appliances and their efficiency, qualified washers use 30 percent less energy and over 50 percent less water.

Toxin-free Paint: Also known as “zero-voc, low-voc, and natural” paint, this is a good option for families that have asthma sufferers. According to the EPA, “Paints, stains, and varnishes release low level toxic emissions into the air for years after application.”

Renewable Flooring: Looking for a beautiful way to incorporate wood flooring into your home? Consider bamboo flooring. How is bamboo a green option? It grows and renews itself quickly, unlikes most woods, making it an ideal and cost effective option for green flooring.

Passive Solar: In effect this option can cost you nothing, if you choose the right designed home. The goal is to design to take advantage of the sun's positioning throughout the year. o that its windows, roof, doors, flooring, etc to take advantage of the sun's position through the year.

Low Flow Toilets: Looking to keep utility costs down in your new home? Low flush toilets use 1.6 gallons per flush versus 3.5 in traditional toilets. That's a lot of water saved. Worried about the efficiency of low flow? There have been major strides made in recent years in improving these toilets. Be sure to talk to your plumber about your options.

Hopefully, these items spur you to seek out your own ways to make your home as green as it can be. 

Published on Realty Times Written by Carla Hill

February 22, 2010 

Thinking about Buying or Selling? 

Call Alvin's Team Today! 877-651-7810 
Or visit our website: www.LivingLakeTahoe.com

Buyers Advice: Housing Affordability

You may be asking yourself, "Is now a good time to buy?" It's a very important question. As a buyer, you're concerned with getting the best deal possible. Will you be buying at the top of the market? Or will you purchase when the market is in favor of you, the buyer?

According to the National Association of Home Builders (NAHB) and their Home Builders/Wells Fargo Housing Opportunity Index (HOI), affordability is high for the 5th consecutive quarter.

How is affordability calculated? In general terms, if housing costs don't exceed 30 percent of the monthly household income, then it meets the standards. Anything more than 35 percent is too high.

"Today’s report is very encouraging because it indicates that homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy."

The HOI indicates that 72.2 percent of all new and existing homes sold in the first quarter of this year were affordable to families earning the national median income of $63,800.

Some of the best markets for affordability is:

• Syracuse, New York

• Dayton, Ohio

• Grand Rapids-Wyoming, Michigan

• Indianapolis, Indiana

• Youngstown, Ohio, and

• Bay City, Michigan

Of course, affordability, like most aspects of the housing market, is a local issue. The local economy has a direct effect on home prices, market favor (buyers or sellers), and the like.

Take for example, New York-White Plains-Wayne, New York-New Jersey. The NAHB says this region continued to lead the nation in poor affordability. Less than 21 percent of all homes sold in the 1st quarter 2010 were affordable.

Other markets where affordability is low:

• San Francisco, California

• Honolulu, Hawaii

• Santa Ana-Anaheim-Irvine, California, and

• Los Angeles-Long Beach-Redwood City, California

Be sure to talk to your local REALTOR® about where your local market fits into the affordability equation. 


Published on Realty Times

Written by Carla L. Davis

Thinking about Buying or Selling? 
Call Alvin's Team Today! 877-651-7810 
Or visit our website: www.LivingLakeTahoe.com

Should You Buy A Condo?

Condos can be a great option for many buyers. But is this type of home the best fit for you? Let's examine some of the pros and cons of buying a condo.

Pros

Maintenance. Most condominiums require very little maintenance from their tenants. Yard work and the like are done and paid for through your monthly dues. Reserve funds are saved up by the condo association for larger periodic repairs, such as roof replacement and painting.
Amenities. In many condominium communities you'll find you have access to a clubhouse, pool, exercise facilities, concierge, or even door security. These great perks cost you nothing extra and are quite the draw for many buyers.

Condo Board. Neighborly disputes happen. You like it quiet. Your neighbor loves their music. Instead of having to address the issue yourself, you can always rely on the condo board to ensure that order is kept, both of the grounds and of the residents.

Cost. In many cases, you can find a condo in your preferred neighborhood for a cheaper price than a single family detached home. This can come in handy when parents want children to go to the best public schools in the area. They may not be able to afford the house around the corner, but they can afford the condo in a community.

Social Living. Many condo residents find that their quality of life is improved by the neighbors they develop friendships with. Some communities have social gatherings and mixers on a regular basis.

Cons
Monthly dues. While the condominium unit itself may come with a cheaper price tag, once you add in monthly dues or fees you could see yourself being priced out of the property. Condo fees range widely, but in some markets and communities can be several hundred dollars a month. And remember, these fees continue even once the property is paid off.

Limited Outdoor Space. Yes, you may have a patio or a balcony, but most condominiums lack any sort of yard space. And what outdoor space the community does offer, is of course shared space with the other residents.

Limited Space in General. You may luck out and find a condo with a garage or storage units. If so, you are in the minority. If you have lots of things to store, and no extra space to put them, remember to add in a storage rental space into your monthly expenses before buying.
Less Privacy. You share a wall with your neighbors. You may even have neighbors above or below you. In this case, remember the noise factor.

Resale. There are fewer buyers looking for condos. Large families are generally on the hunt for a single family dwelling.

Poor Management. What happens if your condo manager hasn't kept enough money in reserve for repairs? The extra expenses are earned through a "special assessment" of the residents. This means you may be slapped with a bill -- unexpectedly -- costing you hundreds of dollars. Poorly managed condos can also run down very quickly. Broken sidewalks, overgrown hedges, and disorderly residents spell disaster for resale value.

Condo Board. You notice this was on the pro side of the list as well. That's because while a board can be your best friend for helping keep order and for dealing with neighbor issues best left for the management, they can also be a little too heavy on the rule making. Some condo boards are very strict. And that extra gnome you wanted to display, just might cost you more than you bargained for.

Subletting. Did you know that a condo board can make it "illegal" for you to rent your unit out? Be sure to check out the rules before you buy, especially if you are considering using the property as a rental unit at some time.

Published on Realty Times
Written by Carla Hill July 1, 2010

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Mortgage Basics

Points, fees, and adjustable rates. If you are brand new to the home buying arena, then mortgage terminology can be as foreign as reading Greek.
The famous quote by Sir Francis Bacon rings true for all prospective buyers, "Knowledge is power." Use the following glossary of terms to help you raise your own awareness.
Underwriting: This lender process is used to determine how much of a risk you and your mortgage would be to their company. An underwriter will evaluate such things as your credit, available collateral, as well as your employment and current debts.
Points: Broken into two categories, discount and origination, this term refers to a fee paid when obtaining a mortgage.
Discount -- These fees are tax deductible. You can assume to pay 1% of the total loan amount for each point. Paying points can reduce your final interest rate.
Origination -- Less popular with buyers, as they offer no real benefit to the borrower, these points are fees paid to the lender or loan officer in exchange for their job of evaluating and processing your mortgage loan. These points are not tax deductible.
Fixed Rate: Your interest rate will remain the same throughout the life of the loan.
Adjustable Rate: Your interest rate is adjusted periodically. There also may be a penalty for paying off the loan before its maturation date.
Amortization: The decrease in the principle owed on a home, as it decreases over the life of the loan.
Down Payment: A portion of your total home cost that is paid up-front. It can result in a smaller monthly payment and a lower principle balance.
Good Faith Estimate: RESPA requires the lender to provide a borrower with an estimate of the fees that will be due at closing. They must provide this within three days of taking your application.
Escrow: Your funds are held in an escrow account by a third party until the closing of your transaction.
Refinancing: There may come a time during the life of your loan that you will wish to refinance. Perhaps you want to take advantage of lower interest rates or to consolidate debt. If you are eligible, in great credit standing, you may be able to do just that.
For more information the mortgage process, be sure to talk with a lender or your real estate agent.

Written by Carla Hill

July 19, 2010