The Home Buyer Tax Credit has been extended! The extension is for home buyers purchasing with binding contracts until April 30th, 2010 and closing dates by June 30, 2010. For great FAQ’s on this subject, go to the NAHB website at www.federalhousingtaxcredit.com.
For all your home buying needs, give me a call. I can help guide you through the home buying process with expert advice. Call me, Adam, anytime at 303-668-6490 with your questions.
The mortgage reform just keeps coming. The latest guideline changes coming from Fannie Mae are lower Debt-to-Income changes. Get ready America, getting a mortgage just keeps getting harder.
As the mortgage industry keeps over-correcting, now they want to make it harder than ever to get a home loan. Fannie Mae is changing their guidelines again so that borrowers will now have to qualify with a 45% back-end debt ratio.
What exactly does this mean? When lenders look at debt ratios, they are looking typically at “front end” and “Back end” debt ratios. Front end means your income to house payment expense only. Your housing expense includes principal, interest, taxes, insurance, mortgage insurance, and homeowner association dues. The preferred magic number for a front end ratio is around the 30% mark.
Back end means all of your front end expenses plus all of your additional debt such as car payments, student loans, credit cards, etc. (typically only those items that are reported on your credit report). As stated previously, that magic number is now 45%. There are exceptions to this rule, but don’t look for too many exceptions.
Previously, Fannie Mae would allow higher debt ratios based on credit scores. So if you had an extremely high credit score, then you could possibly go has high as 60% back end debt ratio.
The bottom line is that the days of easy credit is over. We must all tighten our belts. We can’t just go crazy buying the expensive cars and maxing out our credit cards. We may even have to go without the extras! Oh the horror! But if you are thinking about buying a home, then that is what you must do.
If you are thinking about buying a home in the near future, give me a call to go over your debt situation to see if you will qualify. There is no charge for a consultation. I can show you how to make your home ownership dreams come true!
So far I have written about keeping your balances low and having Length of history, or as we in the biz call it, “seasoning.” Three more items worth mentioning to keep a good score is: types of credit, new credit and inquiries.
Types of credit in use makes up 10% of your credit score. A better way to say this might be the “mix of credit sources.” The scoring system will penalize you for going to a finance company rather than using other sources of more responsible, less costly debt. Finance companies have always been bad news to consumers.
New credit also makes up 10% of your score. As I have mentioned before, opening new accounts will lower your score. My advice to my clients is to stick with just a few cards and then keep those cards for as long as possible. A Visa, Mastercard, Discover or American Express is pretty much accepted everywhere. There is no reason to have a card for every store in the mall.
Inquiries also can affect your score, specifically when you apply for credit. The reason an inquiry can affect your credit score is because as you apply for credit, it shows that you are trying to increase the amount of credit that you have, therefore increasing the risk of default. There are different types of inquiries and some affect your score negatively, while others do not. Inquiries that do not affect your score are Promotional inquiries and Account Management inquiries. Once, I witnessed a clients score drop over 100 points just for letting about 10 auto dealers pull his credit. Because of his car shopping excursion, he could no longer qualify for the mortgage loan to purchase his home.
The bottom line is being careful. Keep a few good cards, keep low balances, and of course pay on time. Very simple and very affective!
I am always available to help with any questions you may have regarding this subject or any other Denver Metro Real Estate question. Call me anytime with your feedback. Direct/Text at 303-668-6490. I am here to help you make sense of the 5280 home market!
There are a number of entities that will help Colorado first time home buyers with either down payment assistance, closing costs or both. The key to getting this assistance is planning well in advance and know your options. Down payment assistance (DPA) can come from the state level, county level or city/town level.
In order to qualify for the assistance, you must be a “first time” home buyer, and your income cannot exceed a certain level. Keep in mind that a “first time” homebuyer is a buyer that has not purchased/owned a home in the last three years. Each DPA sets their own income levels. You must also, in most cases, complete a home buyer course and get your certificate. Some courses can be done online while others must be done in person. Courses can be limited each month, so reserve your seat early. Also, some DPA’s are running out of money. So getting into the class and knowing when you will be able to receive money is primary before spending too much time house hunting.
Bottom line is that if you are going to need DPA, then plan ahead and know how the system works. Getting together with a Realtor and a Mortgage Broker in advance will help you figure out who has the best assistance for your area and will help you plan and time your purchase appropriatley.
For a list of Down Payment Assistance entities in Colorado, please e-mail Adam at adam@5280HomeMarket.com.
Let me be frank…no one wants a junker. You need to think about the “average Joe” and what Joe wants his future home to look like. Just because you live in chaos, doesn’t mean that will be good enough for potential buyers.
Nice homes sell the quickest!! That doesn’t mean that your home has to be the biggest one on the block. It means that your home has to look good and smell good. Take the time to de-clutter. Clean it like you have never cleaned before. Clean the carpet. Put out some nice scents…apple pie or fresh baked cookies works well.
Get a home stager if necessary. Pretend your home is a model home. Why do you think builders have fully furnished model homes? Because that is what sells the home.
So roll up your sleeves and get to work! Sit down, if need be, and watch a lot of HGTV to get some great ideas. Unless getting your house sold quickly and for top dollar is not important to you!
203K loans ROCK! If Fannie Mae and Freddie Mac could do what FHA is doing, and has been doing for many years, then maybe they wouldn’t be in so much trouble! So many of the homes on the market right now that are foreclosed or a short-sale need lots of fixing up. Okay, well maybe not a LOT, but they at least need some new carpet, a fresh coat of paint, and some appliances in the kitchen! Welcome the 203K Home Improvement Loan from FHA.
Some may think this is a new program, but in fact it has been around for many years. It lost it’s popularity for some time, especially during the housing boom. Many lenders are finally bringing it back…even though it never went away.
There are two kinds of 203K loans: the regular and the streamline. The streamline is the most common right now. It allows up to $35 thousand in extra funds after closing to fix up the home that you are buying. There are only a few conditions: The home must appraise in the “after improved value” and the funds cannot be used to make structural fixes or changes. The funds can be used for items like new carpet, new paint, new appliances, new windows, fix/install HVAC, fix/install lighting, and so much more!
So now when you are looking at a house that has “good bones,” picture it with all the fixings. The loan only takes a few extra steps, but well worth the extra effort to be able to make your new house your new home!
For more info on this, contact Adam at www.5280homemarket.com.