Tag Archives: home purchase
Buying a home in Delaware – Consider Ability to Repay Mortgage!

was not on the forefront of the minds of consumers purchasing homes

There was a feeding frenzy to buy homes regardless of the ability to repay the loan

The prevalent thought at the time seemed to be , buy now and worry later

Unfortunately, this school of thought has hence caused thousands to lose their homes in foreclosures and scores other also filing for bankruptcy

 

Since 2008, the mortgage world of finance  has seen a complete change in the way it does business

Lenders as well as consumers must now consider many new guidelines before receiving  a mortgage

 One of the  biggest considerations is can the consumer qualify and still have the ability to repay their mortgage? 

Changes in mortgage underwriting to qualify for a mortgage has been a rude awakening for many consumers, as denials have increased

 Many home buyers have found that the world of lending has changed

Lenders are asking for concrete documentation for income, assets, explanations regarding credit, and other obligations such as student loans and prior collection accounts

These new underwriting guidelines and regulations regarding lending are taking place to make sure consumers are being protected

In other words, it doesn’t do you much good to get into a debt repayment, unless you have the ability to repay that debt, only later to endure the heartbreak of losing what you thought was a sure thing

 Making sure you have the abiliity to repay are a return to common sense and reasonable financial responsibility on both lenders and consumers

 

The

consumerfinance

gov/f/201301_cfpb_final-rule_ability-to-repay-preamble

pdf” title=” final rule” target=”_self”> final rule implements sections 1411 and 1412 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for

consumerfinance

gov/” title=”Bureau” target=”_self”>Bureau believes that these criteria will protect consumers by ensuring that creditors use a set of underwriting requirements that generally safeguard affordability

(source: http://www

consumerfinance

gov/)

Please feel free to contact us with any questions or concerns or to see if you This entry was posted in blog and tagged , , , , , on by .

9 Considersations Before A Home Purchase in Delaware

You live in Delaware and currently own your home, but your family hdelaware, home purchase, mortgage creditas grown or perhaps you’re retiring and want to down size.  Everyone has a different reason for buying their next home. 

You have purchased a home before and have a good idea of what to expect when making your home purchase.  However, over the last 4 years there have been a lot of changes when it comes to buying your home.  For the most part, changes in mortgage financing have been a good thing for consumers.  The best part is that we are getting folks, just like you, into their Delaware homes every day.

Below are 9 things to consider before you begin searching for your new home:

1.  How much do feel your current is worth if you put it on the market to sell today?

Compare your house to others nearby to get comparable values. The purchase market call these comparisons, “comparables.”

2.  How much money will you realize after the sale of your current home?

This is the amount of money you will net from the sale of your house, after you payoff your current mortgage, transfer taxes, realtor fees and other closing expenses.

3.  How long do you think it will take to sell your house?

Ask yourself, are homes in your area selling fast or slow?  This is a good yardstick to determine your estimated transition to a new home.

4.  Are you comfortable shopping for another house, without knowing you have a buyer for your current house?

Some folks are comfortable shopping for a new home without knowing whether or not their current house will sell in time and not knowing how much they will receive from their current house sale.  Yet, others are not comfortable to move forward until their current house is definitely under a sales contract.  

5.  Does your income justify the new mortgage payment?

More importantly, does your current income support a new higher mortgage payment?

6.  How is your credit?
 
Have you made all your past mortgage payments to date on time?  Are you paying your other revolving debt on time?

7.  Do you have additional assets available to put down toward the purchase of your new home?

Do you have money saved?  You have other liquid assets to put down on the new house and still have funds for closing?

8.  Is your current job stable?

No one knows for sure how stable their job is in today’s economy, but you better than anyone, will have to answer this question. 

9.  How will the move to a new home impact your life?

Purchasing a new home should be considered one that will hopefully improve your quality of life.   Be careful not to stretch your budget to the maximum when considering your new home purchase.  Doing a household budget will help give you good direction in determining your overall ideal number for a new mortgage payment.  

Moving is considered one of the top 3 changes that will occur in your life.  The nice part is that mortgage process can go very smoothly and very quickly.

Congratulations, if you have decided to purchase another home.  Our experiences have shown that no two persons are exactly the same in their needs and wants. 

Take advantage of our free 30 minute consultation to determine what you can afford, what terms are best, and which program works for your needs.  More importantly, you want to make sure you have the proper timeline and steps in between to make your home purchase as smooth as possible.

Buying a Home – Top Ten Mistakes

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For most people buying their first home is the largest  investment they will ever make. However, few people do the research necessary to make a good buying decision. The home purchase process is extremely confusing for most people. With a little bit of homework and with advice from family and friends who have been through the process before, you can make this a little easier on yourself. There is no substitute for taking time to educate yourself before you buy a house — which typically costs you 25% to 40% of your gross income!

Buying a house

1.    Looking for a house without getting pre-approved.

Do not confuse a pre-approval with a pre-qualification. During the pre-qualification process a loan officer asks you a few questions and hands you a pre-qualifying letter. The pre-approval process is much more complete.

During a pre-approval the mortgage company does all the work of a full-approval, except for the appraisal and title search. When you are pre-approved — you become like a CASH BUYER and have more negotiating clout with the seller. In some cases (especially in multiple offer situations), having pre-approval can make the difference between buying a home and not buying a home. In other instances home buyers have been able to save thousands of dollars as a result of being in a better negotiating situation.

Most good Realtors will not show you homes before being pre-approved because they do not want to waste your time, their time, and the seller’s time. Many mortgage companies will pre-approve you at little or no cost. They typically will need to check your credit and verify your income and assets.

2.    Making verbal agreements!

If an agent makes you sign a written document that is contrary to their verbal commitments — don’t do it! Example: the agent says that the washer will come with the house, but the contract says that it will not — the written contract will override the verbal contract. In fact, written contracts almost always override verbal contracts. Buying house a is a very complex process — but it’s a lot easier when everything is in writing.

3.    Choosing a lender just because they have the lowest rate. Not getting a written good faith estimate.

While rate is important, you have to look at the overall cost of your loan. This includes looking at the APR, the loan fees, as well as the discount and origination points. Some lenders add origination points into their quoted points while other lenders add an origination point in addition to their quoted points. So when one lenders says 2 points they mean 2 points, whereas another lender means 2 points plus 1 origination point.

The cost of the mortgage, however, cannot be your only criteria. There is no substitute to asking family and friends for referrals and interviewing prospective mortgage companies. You must also feel comfortable that the loan officer you are dealing with is committed to your best interests and will deliver what they promise. Often the company that has the absolute lowest quoted rate may not be the best company for your mortgage business.

4.    Choosing a lender just because they are recommended by your Realtor.

Your Realtor is not a financial expert. They may not know what’s the best loan for you. The Realtor only gets a commission when your house closes. As a result the Realtor may refer you to a lender that is sure to close the loan, but not necessarily the lender that has favorable rates or fees. Also many Realtors refer you to their friends in the loan business — who again may not be able to get the best loan for you. Even if the Realtor is very professional and looking out for your best interest, you should still do your homework.

We recommend shopping for a loan with at least 3 mortgage companies before you make a decision. There are countless stories of consumers who wound up paying higher rates or getting a loan program that was not right for them, because they blindly followed their Realtor’s advice.

5.    Not getting a rate lock in writing.

When a mortgage company tells you they have locked your rate, get a written statement which details the interest rate, the length of the rate lock, and details about the program.

6.    Using a dual agent i.e. an agent who represents the buyer and the seller on the same transaction.

Buyers and sellers have opposing interests. A dual agent in most normal situations cannot be fair to both the buyer and seller. Most dual agents represent the sellers more strongly than they do the buyer. If you are a buyer, it is much better to have your own agent who will be on your side. The only time you should even consider a dual agent is when you get a price break from using a dual agent. If that is the case, then tread carefully and do your homework!

7.    Buying a house without a professional inspection. Taking the sellers word that they have made repairs.

Unless you are buying a new house where you have warranties on most equipment, it is highly recommended that you get a property inspection, a roof inspection and a termite inspection. This way you will know what you are buying. Inspection reports are great negotiating tools when it comes to asking the seller to make repairs. If a professional home inspector states that certain repairs be done, the seller is more likely to agree to do them.

If the seller agrees to do the repairs, have your inspector verify that they are done prior to close of escrow. Do not assume that everything has been done the way it was promised.

8.    Not shopping for home insurance until you are ready to close.

Start shopping for insurance as soon as you have an accepted offer. Many buyers wait until the last minute to get insurance and do not have time to shop around.

9.    Signing documents without reading them.

Do not sign documents in a hurry. Whenever possible try to get documents that you will be signing ahead of time so you can review them. It is advisable to ask for a copy of all loan papers you are signing a few days ahead of the close of escrow. This way you can review them and get your questions answered. Do not expect to read all the documents during the closing. There is rarely enough time to do that.

10.    Making your moving plans too tight.

Example: you expect to move out of your prior residence on a Friday and into your new residence over the weekend. So you give notice to your landlord to end your lease on a Friday and arrange for movers to come to your house on Friday. Then, your loan closing gets delayed until the next Tuesday. You now may be homeless! New tenants could be moving into your apartment, and the movers are going to charge you for wasting their time. You could be forced to live in a motel for a couple of days!

A Better Plan:

Allow for a 5-7 day overlap between closing and moving. In the long run it is not nearly as expensive, and it will sure give you peace of mind. 

 

If you have any questions about the 10 Ten List of Mistakes homebuyers make when purchasing a home,  contact Sam at (302)266-9500 or simply click the button below and complete our online contact form. 

 

contact-sam

Mortgage Rates Hit New Lows!

fixed rate 30-year mortgage fell this week, yet to another record low, according to data from Freddie Mac

The low rates come amid signs of improvement in housing — declining foreclosures and delinquencies, and increases to housing starts and the NAHB housing index — and would be a nice touch for those looking to refinance, although many have struggled to take advantage

An array of weekly and monthly data have been closely watched as economists look for affirmation of a trend — be it improvement or continued distress — and as homeowners and prospective buyers wrestle with regional realities, which vary greatly

When it comes to rates, some of the factors hitting home are originating further away

  The economic turmoil in Europe, in particular, is having an effect, according to Freddie Mac vice president Frank Nothaft

The low rates are encouraging demand

Mortgage applications increased 9

2 percent last week from one week earlier, according to data from the Mortgage Bankers Association’slow rates, in part because of backlog at large banks

Thursday’s data follow a report that foreclosure filings in the U

S

dropped to a five-year low last month as lenders upped efforts to avoid seizing properties

Bank of America (BAC), for one, said last week that it was rolling out new efforts to help keep homeowners out of foreclosure thanks to the robo-signing settlement

It began mailing 200,000 letters offering certain customers mortgage principal reductions, and eligible borrowers could get as much as $150,000 knocked off the balance of their mortgages

One improvement in the housing landscape: The delinquency rate for one-to-four-unit residential properties decreased by 18 basis points in the first quarter from the fourth quarter of 2011

At the end of the first quarter, there was a delinquency rate of 7

4% of all loans outstanding

“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve,” said Michael Fratantoni, MBA’s Vice President of Research and Economics

  “Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future

Data on housing starts in April and the NAHB housing index in May, released earlier in the week, both increased more than expected

 

How low will mortgage rates go? And have you been able to take advantage? Let Sam know by clicking on the button below with your input

  You can also give him a call at (302)266-9500


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