Posted on 13 October 2010 by Carson
Buying a home is complex enough but when it comes to financing, you need to make sure you are as prepared as possible in order to get a loan.
There are a number of mistakes you can make along the way of getting your loan approved. Here are some of the things to avoid to make the process go smoothly.
1.Don’t choose the wrong mortgage: Home loans may no longer be the lifetime obligations they used to be but still — you don’t want to be saddled for even a short period of time with the wrong one. Investigate all of your options, then lay your choices side-by-side and do the math, making sure to compare worst-case scenarios. Be sure to look at initial interest rates, future interest rates and payments (if different), and the possibility, though now rare, of prepayment penalties.
2. Don’t confuse “pre-approved” and “pre-qualified” with a loan commitment: When you are “pre-qualified,” the lender is making an educated guess about how much you can borrow based on information you’ve provided. When you are “pre-approved,” the lender has verified everything you’ve provided and is offering to lend you up to a given amount at current interest rates — under certain conditions. It’s much better to be pre-approved when shopping for a home because both you, your real estate agent and the seller know what you can afford. Whether pre-qualified or pre-approved, final clearance and a check at closing — a loan commitment — are subject to an appraisal satisfactory to the lender, good title, a last-minute credit check, and other verifications. When meeting with lenders, always ask what additional steps will be required to obtain a loan.
3. Don’t have too much credit: Excessive credit is almost as bad as no credit or even bad credit. Even if you pay your bills on time, lenders tend to focus just as much on how much credit you have available to you as they do on timeliness. So being up to your ears in car loans and credit cards is a sure way to be turned down for a mortgage. Postpone any big-ticket purchases until after you buy your house.
4. Don’t lie on your loan application: Exaggerating your income on a mortgage application or putting down other untruths can be a federal offense. Lenders rarely prosecute liars but if they find out later, they can call your loan due and payable. Don’t ever sign your name to a loan application that is not completely filled out, either. Loan officers have been known to stretch the truth to get a client approved, but it’s the borrowers who end up paying the price, often in the form of monthly loan payments they can’t afford.
5. Don’t hide if you can’t make your payments: The worst thing you can do is ignore phone calls and letters from your lender when you are behind on your payments. Lenders have many options at their disposal to help keep borrowers from losing their homes to foreclosure. But they can’t do anything for you unless they can talk to you about your difficulties. Lenders are the enemy only if you give them no other choice.
6. Don’t skip a home inspection: Failing to make your purchase contingent on a satisfactory home inspection could be a costly mistake. Independent home inspectors examine houses from stem to stern. They’ll be able to tell you whether the roof or basement leaks, whether the mechanical systems are in good shape and how long the appliances should last. They can’t report on things they can’t see, but at least their trained eyes are better than yours. So don’t pass just to save $300-$400; that’s money well spent.
7. Don’t hire just any agent to sell your house: All real estate agents are not the same. You want to look for those who specialize in your neighborhood and are top producers. Ask your candidates how they plan to market your house, what you can do to make the place more attractive to prospects and how much you should ask. If you don’t like any of the answers, look elsewhere.
8. Don’t fail to check out a remodeler: Never, ever hire a contractor who knocks on your door or says his prices are good for only a few days. Reputable remodelers don’t solicit door-to-door, and they don’t cut prices just because they happen to be in your neighborhood. Check out a potential contractor thoroughly by calling several of his past clients, your local better business bureau, his bankers and suppliers, and your local consumer affairs agency.
9. Don’t pay too much upfront: If a contractor asks for more than a third of the contract price as a downpayment, chances are something’s wrong. At worst, he’s a scam artist who has no intention of returning after he cashes your check. At best, he’s undercapitalized and can’t afford to purchase materials on his own. Or, in between, he could be using your money to pay workers on another job. Never give a contractor cash, either.
10. Don’t burn your mortgage: It’s a wonderful feeling when you make your last house payment. After all, the place is now yours, all yours. Many people celebrate by holding a mortgage burning party. But they torch the original document. Don’t. Make a copy and burn that instead. Keep all your loan docs in a safe place.
Posted on 08 September 2010 by Carson
I have some good news to report based on August pended (accepted purchase agreements) results. August pended transactions increased for the fourth consecutive month. As I have mentioned a couple of times over the past few months, the now expired tax credit makes month to month comparisons difficult. The tax credit clearly stimulated, then depressed the housing market. As expected May pended transactions dropped dramatically after the spectacular March and April numbers. This coincided with the expiration of the tax credit on April 30th. We have gone from 269 pended transactions in May to 387 pended transactions in August. This represents a 44% increase. Although that is good news, it is important to keep in mind that the 44% increase is from a low starting point. What is good however is that the 387 pended transactions is slightly higher that the preceding twelve month average of closed transactions. The average sales price in this May-August period has been virtually unchanged. Both of these pieces of information suggest that our market has stabilized, both in terms of price and units sold.
I do not anticipate continued growth at these levels over the next few months. Until the unemployment rate drops and our economy begins growing at a faster rate there will not be additional significant improvement in the housing market.
We did add another enhancement to FCTuckerEmge.com last month. In the detail section of every listing there is a “Community Info” section. In this area you can click on “What’s nearby”, “Nearby Schools”, “Nearby Sold Listings” or “Community Stats” to get detailed location specific information about every listed home. If you are not at your computer you can always get property information on your smart phone at Tuckermobile.comHopefully you had a chance to enjoy the fabulous weather over the Labor Day Weekend. I’ll be back in touch next month with more current local housing information.
Posted on 19 July 2010 by Carson
We now have results from June closings and as I suggested, closed transactions declined from April and May. Although June closings were almost 21% below May levels they were still slightly higher than the average for the preceding twelve months. I do not expect July closings to be significantly different from June. 2010 will be something of a mirror image of 2009 for closed transactions. The second half of 2009 was significantly stronger than the first half of 2009. I believe that the first six months of 2010 will be stronger than the second six months of 2010. The reason for this disparity in both years is the timing of tax credits. The initial homebuyer tax credit expired in November of 2009. The tax credits were subsequently extended and they expired in April of 2010. I do not expect any renewal of these tax credits.
The best news going forward is that interest rates are at some of the lowest levels in history. Since home prices are lower than they were a few years ago, and rates are great, you can buy more house with a lower monthly payment than at any time in recent history.
We have also made shopping for homes easier than ever. We just introduced Tuckermobile.com. This allows you to shop for homes quickly from your smart phone. Now you can find everything from anywhere, any time. Simply go to Tuckermobile.com and you can search by Street name, MLS number, zip code or any of several other options. You can also save properties you select. If you have signed up for MyFCTuckerEmge.com any saved properties you select on Tuckermobile.com will automatically appear on your saved searches. All of this is free. All of this is automatic. None of it requires a download and it gives you 24/7 access to the entire MLS system from your smart phone.
I can’t do anything about the temperature outside but I can help you shop from where ever you are comfortable. Give me a call if I can help with any of your real estate needs and as always I really appreciate referrals if you know of someone else that is thinking about buying or selling.
Posted on 16 June 2010 by Carson
As I said last month, sales in March and April were spectacular!
Many of the contracts written in those months closed in May. Closed volume in May was at its highest level since June of 2007 and was $10 million higher than any month in over two years.
All those closings also reduced our month’s supply of inventory to just over 6 months supply. That means our inventory of homes is at its lowest level in almost 4 years.
All of that is great news, but real estate results and conditions should not be measured based only on one or two month’s activity. A longer period of time gives us a more accurate picture. Pended transactions declined significantly in May, partially as a result of the expiration of the tax credit.
Closings will still be healthy in June, just not at May levels. The key question now is where do we go from here? Although we will not see results like March and April anytime soon, there are several reasons, according to The Kiplinger Letter, to believe that housing sales are on a steady but slow increase. First home prices are very affordable.
It now takes about 18% of the typical household income to meet principal and interest payments on a single family home which compares favorably with the long term average of 26%. Second, consumer confidence is improving which is critical to expensive, long term commitments, like home purchases.
As I said a couple of months ago, three quarters of Americans believe now is a good time to buy. Third, there is a consensus that credit conditions will ease and that mortgage interest rates will remain at their very low level for several more months.
We won’t, and we shouldn’t, go back to the freewheeling days of 2007 but a slight loosening of credit can be helpful without creating unreasonable risks.
The best tip I can give you about shopping for homes is to start at http://www.carsonlowry.com We just enhanced and enlarged the size of pictures on all listings and are in the process of making several other improvements which we will roll out later this year.
Posted on 18 May 2010 by Carson
As I said last month, pended transactions (signed contracts for sales not yet closed) for March were great. Pended transactions for April were simply off the chart. I believe that pended transactions for March and April combined were the best two month period in local MLS history. As a result, inventory was just over 7 month’s supply. I think the important questions, as a result of the past two months performance, are what does this mean and where are we going?
I think we know several things and we can draw some conclusions. First, closed transactions during May and June will be excellent. This will continue to keep inventory levels relatively low especially compared to unusually high levels we saw at the beginning of the year. I also believe that the homebuyer tax credits that expired at the end of April were clearly a factor in these remarkable sales numbers. The key question is: how big a factor were the tax credits? If average pended transactions for May-July are only down 25% from April’s spectacular numbers the housing market is in excellent condition. If pended transactions are down closer to 50% then we still have to wait for a fuller recovery. I believe that the number will be between 30-40%. That indicates that things have definitely improved and we are moving in the right direction, but we still have room for improvement.
Two other bright spots are an improvement in closed transactions over $200,000 and an improvement in sales price to list price percentage. For homes over $200,000 sales are up 31.3% in the first four months of this year compared to the same four months last year. Sales price to list price in April was 95.83%, the highest percentage in almost two years. This is another sign of our improving market.
School will be out soon and I’m looking forward to a great summer. It’s easy to look for homes anytime, regardless of the weather, at http://www.carsonlowry.com
