My mortgage guy tells me it’s a great time to get a refinance done for your house if you would like to reduce your interest rate or need to get money out for repairs, kid’s schools, etc. You will need to be prepared to qualify with a full documented loan as there are no longer loans that are no documents or stated income loans. This will affect those who have their own businesses more than anyone else as the income can be reduced tremendously by write-offs on taxes.
You will also want to make sure you improve your interest rate by at least a point if you are strictly doing a rate/term refinance and that you intend to occupy the property for at least another five years. This should allow enough time to go by so you can make up the additional cost of a refinance. The longer you stay in the property the more you will save in interest over time.
If you don’t know whether it makes sense or not, contact a lender and ask them to walk you through the numbers. It is certainly worth talking to somebody to make sure if it’s right for you or not.
One of the biggest questions I am getting these days is about where interest rates are headed. Though there is no way we can tell from day to day there is a consensus that interest rates will rise over the course of the year. The Federal Reserve has stopped purchasing toxic mortgage assets as of the end of March 2010 and there was a bit of a rise for several days. However, the rate has come back down to the 5% range, which is very good.
What we don’t know is when rates will start increasing or how far they will go before they settle. We do know that rates are far more likely to go up this year then down and a good economy normally has a rate that averages between 7 and 8%. I’m sure while we all would love to see the economy improve, know one likes the idea of rates being in the 7 and 8’s again. However, at some point in the future, they will go up. The question is; will you be able to take advantage of the still historically low rates before they increase? If you are ready, let me know. I will be more than happy to introduce you to a good lender who can help you get qualified.
I am now a believer in using a local lender! Sometimes I have a client that insist on using a lender from other areas of the country and that is their right. However, I have again experienced how difficult it is to get a loan closed on time using someone in another state. In fact, the loan that was supposed to have closed at the beginning of May and is still not completed and closed. Though I had told my client the perils of using someone who is not familiar with the areas costs and appraisers, they insisted until it started to hit them in the pocketbook.
Once they realized and saw the added fees and other “extras” that were placed on top of the normal fees they had to pay, they decided to change lenders and use someone in our local community. It is really easy for someone to mislead you with a great GFE then shoot you an updated one that is totally different. Please be careful to use someone you can talk to regularly, who will return your phone calls and answer your questions. It makes the process go smoother and take a tremendous stress off of you and your Realtor!
Since there are so many first time home owners looking to purchase a home right now due to the advantages of the tax credit and low interest rates, I thought I would let you know the basic information you will need to have in order to qualify for a loan. This is what the lender will look at to determine if you can be qualified. The more accurate the information you give them the very first time you talk to them the better they can determine if you can be pre-approved for a loan.
You will need the following:
- A two year work or college history
- A two year address history
- Copies of W-2’s for the past 2 years
- If self employed, copies of the last 2 years tax returns
- Copy of your drivers license
- Copy of last 2 months bank statements (all of them and all the pages)
- Copy of the last statement on retirement accounts (all pages)
- Copy of divorce decree if this will affect or impact your financial situation
- Copy of child support documents if you pay or receive child support
- Be prepared to either write a check for your appraisal or have a credit card ready
- Credit will be pulled so you will need to provide a social security number and birth date
- If applicable, proof of discharged bankruptcy
- If applicable, deferred student loans (must be 12 months or more) or show where another person pays the student loans
There may be a few other things but this is the most basic items you should be prepared to provide information on or documentation for. If you need to be pre-approved for a loan, I call me and I can point you to some good lenders in the area.
In today’s mortgage market, credit hasn’t dried up but it sure has tightened up so that many people are left on the sidelines due to credit scores, lack of down payment and MI restrictions. The Federal Housing Administration (FHA) has tightened up it’s lending as well but still remains one of the easiest places to qualify for a loan mainly due to the fact that it provides the mortgage insurance and has less restrictions than conventional loans.
You only need 3.5% down payment with a FHA loan, compared to the 5% with a conventional loan, and that can come in the form of a gift. FHA loans do not have the tiered credit restrictions, no income cap or geographic restrictions and no pre payment penalties. You can also finance part of your Mortgage Insurance in with the loan thus lowering your monthly payment for easier qualification purposes. The interest rates continue to be very competitive with conventional rates and the appraisal process has been streamlined as well. Check with your favorite lender or loan officer on these and other benefits to the FHA loan program.
I was looking around the other day and decided to see what kind of deals I could find just in the Hendersonville area. I know from a couple of showings that I have done in East Nashville and Madison recently that there are some real gems on the market; you just have to find them! I was not shocked to find some great deals in Hendersonville as well. I understand that many people are holding back and waiting to see what the government is going to offer in terms of tax credits and interest rates but I will also say these bargains won’t last!
I spoke to a lender today and he let me know that 5% is still doable and the $15,000 tax credit was struck from the stimulus bill so it’s still the $7,500 that is the same as before with the same provisions. He also told me he had no information on the lowering the interest rate to 4.5%. What I do know is rates are still good and there are some great deals out here in the Nashville and surrounding markets!
If you were wishing that rates would come down again; your wish has come true! Rates went down substantially at the end of last week with the announcement that the government is picking up some of the more toxic mortgage backed securities that are held by the largest of banks.
Though no one knows if this move will help maintain these rates, we do know that it looks like, at least for the short term, these rates will help more people qualify for home loans. You really do need to get qualified with a lender before you start looking for a home to buy. Don’t get your hopes up just to have them dashed once you find out you don’t qualify. I’ve seen how hard this is on people and it just makes since to get qualified first. It makes the process for everyone easier.
If you are currently in the market to purchase a home, now is a great time to buy. You will have to qualify for a loan and that could be more difficult than it has been in the past. It is no secret that the credit market in the mortgage industry has tightened. However, if you have 4% down and can qualify with a full documented loan the rates are still very good.
For those who don’t have money down but can qualify otherwise and are a first time homeowner, you have an option to do a THDA loan that includes a grant for down payment money. This is not free money and has to be paid back if you live in the house less than nine years. There are some other restrictions and you will need to discuss these with a THDA approved lender.
Inventory is up and you have a lot to choose from; rates continue to stay low; sellers are motivated to sell their properties; so what are you waiting for to find your new home?
There is nothing as miserable as purchasing a home and not being able to pay or maintain it the way you want too. This is why it is so important to make sure, to the best of your ability with your loan officer, that you can afford the property you are looking to buy. A lot of what you are hearing about on the news these days is a result of not knowing what you can comfortably afford and getting over your head.
That is not to excuse the loan officers that took advantage of some of their borrowers but it is up to you to get some knowledge about home ownership. One of the best places I know to take a home owners education class is through the Tennessee Housing Development Agency, also known as THDA. This wonderful organization is dedicated to helping first time home buyers but you do not have to be a first time home buyer to take the homeowners education class. After all, no one really wants to be haunted by their house!
The Great Start program administrated by the Tennessee Housing Development Agency or THDA, is primarily for first time home buyers who do not currently have enough money to meet the FHA, VA or conventional loan requirements. To get started and purchase a home you will need to have at least 3% currently and 3 ½% starting January 1, 2009. The THDA Great Start helps you obtain a grant for up to 4% toward down payment and pre-paid expenses.
All three of the THDA loan programs for first time home buyer have certain restrictions based on the county you live in that include; acquisition cost and income. Income is dependent on how many people are living in the house as well. As with all loans you will be expected to qualify and provide a full loan documentation set that includes; W2’s, tax returns, bank statement, statements of additional assets and proof of residence.
Though the interest rate on a THDA program is set ahead of time, with the volatility of the market, it would be irresponsible of me to list the current rate just in case something changed after I write this blog. With that said, I recommend you check with a preferred THDA lender for the current rate. All of the loans are 30 year fixed loans and have a recapture tax provision that your lender should explain in full. Of course, if you have any additional questions, please don’t hesitate to email or call me.
