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5 Tips for Homebuyers Seeking a Mortgage

Here’s a warning for potential borrowers: Nervous lenders have tough new rules and are paperwork crazy.

"Borrowers are going to have to prove they are the borrower they say they are," says Keith Gumbinger, vice president of HSH Associates, a mortgage-industry publisher in Pompton Plains, N.J.

Gumbinger says homebuyers should consider these things before they apply for a loan.

1. Down payments are critical. Borrowers should expect to put down at least 10 percent for a “conforming loan” – a mortgage that Fannie Mae and Freddie Mac will purchase.

2. Credit scores count. A 720 on the 850-point FICO rating scale will get a borrower access to the best rates. Rich Bira, branch manager of FCM Direct Lender in Chicago, says: "A score between 720 and 739 gets 0.125 percent added to the rate, a score between 700 and 719 gets 0.375 percent added to the rate, and a score between 680 and 699 gets 0.5 percent added to the rate.”

3. Consider VA and FHA. Borrowers without down payments or with less than stellar credit scores should consider these government-insured loans offered through the Federal Housing Administration of the Veterans Administration.

4. Unearth the records. Before applying, borrowers should organize tax, banking and other records that prove income, savings and debts. They should also expect to be patient about what may seem to be endless requests for information.

5. Get rid of debts. Limiting debts, including what borrowers expect to pay for the mortgage, to less than 43 percent of gross income is important.

Source: Chicago Tribune, Mary Umberger (02/15/09)

Stimulus Provisions to Help Put Housing on the Right Track

Stimulus Provisions to help put Housing on the Right track. We need to focus on the Positive Solutions.

The Obama Bail Out Means Loan Modifications For Westchester County, NY

Housing Bailout at $275 Billion

Obama Plan Would Fund Loan Modifications, Cover More Losses at Mortgage Titans:

The plan, which could cost as much as $275 billion, will enable as many as five million homeowners who have little equity in their homes — or even owe slightly more than their homes are worth — to refinance loans through government-controlled mortgage giants Fannie Mae and Freddie Mac. The administration set aside $200 billion in new backing for the pair, which will play a central role in the rescue.

In addition, the government plans to spend $75 billion to encourage lenders to modify loan terms for people at risk of foreclosure or already in foreclosure proceedings. Lenders and the government would jointly lower monthly payments to 31% of homeowners’ income. To encourage servicers, the plan includes incentives such as $1,000-a-year “pay for success” fees if a borrower stays current on the loan.

When I post this sort of thing, my clients ask me, what does this mean in Westchester County, NY? Simple. There is a way out. Loads of homes have lost loads of value. You don’t have to sell your home to get out of that Subprime mortgage that you were planning to get rid of anyway. You can call me and we can work out a permanent solution or alternative to foreclosure.

Looking for a Distressed Property In Westchester County, New York? Two Things You Need To Know

by Anthony Crecco on February 18, 2009

You can’t turn the television on without commentary about how it’s the end of the world in real estate. Everyone is talking about prices coming down, down, down, down. The market may have a ways to go, but a lot of investors are starting to think that it’s at or near the bottom, and coming out to buy distressed property. With Fannie Mae and Freddie Mac also letting real estate investors come back to the table and buy more properties, it’s key that distressed property is going to be a huge part of the recovery. To make this really work for you, there are a two things that you must know about the types of distressed property.

Buying REOS /Bank Owned Properties

Here in Westchester County, NY, REOS are simply property that the bank owns, has gone through the foreclosure and sheriff’s sale process. A bank now holds the deed and they sell them through REO Listing agents. The banks are extremely motivated to sell these properties, and with the different Bailouts that have been passed, REOs can be among the best deals in real estate right now. A lot of investors are buying REO properties because the banks are very price motivated.

What you need to know when you’re dealing with an REO is mainly this: the Bank wants to close fast, and they don’t want to make repairs. You’ll need to make sure your financing allows for some cosmetic issues with the property because there will often be minor interior and exterior repairs that you’ll have to make.

Short Sales/Quick Sales

Westchester County, NY also has a lot of short sales and quick sale properties. Short sales are properties where the homeowner couldn’t keep up the house, and has to negotiate with the bank as an alternative to foreclosure . The homeowner (maybe even you) wants to sell, but they owe too much. They negotiate with their bank, and do it. For a complete view of how this works, look at the short sale book I wrote on the sidebar.

Generally, these properties are in better condition than REOs, and generally, these properties can be good deals. When yo make an offer on a short sale, make sure that you have time to wait because it does often take banks 3-4 weeks just to get back to you since they have to order an appraisal, and make sure that they are not making an foolish decision. Buying properties this way is not difficult, but it is often a much slower process.

What you need to keep in mind in a market like this–particularly if you’re an investor–is that you can’t fall in love with a house if you’re going to try and make money on it. Sure, if you are wanting to live somewhere it’s probably OK to pay a little extra. But it’s not OK to pay extra for an investment, and you have to be willing to walk away from whatever house that you see and make an offer on another house.

I’m around to help and lend my real estate expertise to any situation here in Westchester County, NY. Make sure you call me any time for whatever help you need.

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