3 Common First Time Home Buyer Mistakes Can Cost Thousands, by Steph Noble


Buying real estate for the first time is a very exciting step in life.

It is likely to be one of the biggest financial commitments that you make, so it’s very important to navigate the purchasing process wisely.

Many first-time home buyers make rookie mistakes that bring on negative consequences and a lot of frustration.

Outlined below are common errors home buyers make, so you can learn from their missteps and avoid them yourself.

 

1. Buying More Than What You Can Truly Afford

Just because the bank says that you qualify a certain amount for a mortgage doesn’t mean that you have to choose a house at the very top of this price range.

Many people get carried away and buy the most expensive house that they qualify for.

If something unexpected happens, they may find it difficult to keep up with their monthly mortgage payments later on.

Remember that you will also have student loan payments, vehicle costs, credit card bills, health insurance, groceries, retirement savings and other expenses, so make sure that your mortgage payments will comfortably fit within your budget.

 

2. Failing To Get A Home Inspection

Before buying a house, you should always have a professional inspection done. Not doing so is a big mistake.

You don’t want to get stuck with hidden damage that could saddle you with the expense of ongoing repairs.

Hiring a professional to assess the home’s condition is absolutely essential before making your final decision.

 

3. Disregarding Your Future

When you are buying real estate, don’t just think about how the home will work for you in the immediate future.

Also consider what your needs will be five, ten or even 20 years from now.

Find out the development plans for the neighborhood.

Look for reputable schools if you intend to start a family.

And consider whether the street’s home values are likely to increase or decline in the future.

 

Your Next Steps

Don’t let the home-buying process overwhelm you!

Learn from these common first-time home buyers’ mistakes, so you can avoid them.

A great next step toward planning for your first home purchase is to consult with a trusted, licensed mortgage professional who is trained in providing the best advice on how a new home will affect your budget.

 

 

Steph Noble
http://stephnoblemortgageblog.com/

3 Tips To Get The Best Results On Your Mortgage Application, by Steph Noble


Although the financial markets have tightened lending guidelines and financing requirements over the last few years, the right advice when applying for your loan can make a big difference.

 

Not all loans are approved. And even when they aren’t approved immediately, it doesn’t have to be the end of your real estate dreams.

There are many reasons why a mortgage loan for the purchase of your real estate could be declined.

Here are a few things to understand and prepare for when applying for a mortgage:

 

Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the percentage of the appraised value of the real estate that you are trying to finance.

For example, if you are trying to finance a home that costs $100,000, and want to borrow $75,000, your LTV is 75%.

Lenders generally don’t like a high LTV ratio. The higher the ratio, the harder it normally is to qualify for a mortgage.

You can positively affect the LTV by saving for a larger down payment.

 

Credit-to-Debt Ratio

Your credit score can be affected negatively, which in turn affects your mortgage loan if you have a high credit-to-debt ratio.

The ratio is figured by dividing the amount of credit available to you on a credit card or auto loan, and dividing it by how much you are currently owe.

High debt loads make a borrower less attractive to many lenders.

Try to keep your debt to under 50% of what is available to you. Lenders will appreciate it, and you will be more likely to get approved for a mortgage.

 

No Credit or Bad Credit

Few things can derail your mortgage loan approval like negative credit issues.

Having no credit record can sometimes present as much difficulty with your loan approval as having negative credit.

With no record of timely loan payments in your credit history, a lender is unable to determine your likelihood to repay the new mortgage.

Some lenders and loan programs may consider other records of payment, like utility bills and rent reports from your landlord.

Talk to your loan officer to determine which of these issues might apply to you, and take the steps to correct them.

Then, you can finance the home of your dreams.

As Inventories Shrink, So Do Seller Concessions, by RisMedia


With inventories down and prices up, sellers are ending the costly incentives they have been forced to offer buyers during the six-year long buyers’ market. Concession-free transactions make deal-making simple on both sides of the table.

There’s no better gauge of the onset of a seller’s market than the demise of concessions that were considered essential to attract buyer interest just a few months ago. The National Association of REALTORS®’ December REALTOR® Confidence Outlook reported that the market has steadily moved towards a seller’s market with buyers more willing to bear closing costs, in some cases paying for half or more of the closing cost. Tight inventories of homes for sale are making markets increasingly competitive.

NAR reports that last year 60 percent of all sellers offered incentives to attract buyers. The most popular was a free home warranty policy, which costs about $500, offered by 22 percent of sellers, but 17 percent upped the ante by paying a portion of buyers’ closing costs and 7 percent contributed to remodeling or repairs.

Concessions linger where inventories are still adequate and sales slow, but in tight markets like Washington D.C., the times when buyers can expect concessions are already over.

“Buyers are discovering, to their dismay that homes they wanted to see or possibly buy have already been snatched up before they even get a chance to see or make an offer on the property. This area’s unprecedented low inventory levels are slowly driving up home prices and making sellers reluctant to cede little if any concessions to buyers. Realtors are warning (or should in some cases) buyers to be prepared to act that day if they are interested in a property,” reporters a local broker.

In Albuquerque, supply is dwindling and sales are moving to a more balanced market. “Buyers can expect sellers to offer less concessions and sales prices will be close to list price,” reports broker Archie Saiz.

In Seattle, not only are concessions a thing of the past, desperate buyers are even resorting to writing “love letters” to win over sellers in competitive situations. Lena Maul, a broker/owner in Lynnwood, reports a successful letter-writing effort last month by one of her office’s clients. Those buyers, who were using FHA financing, wrote a letter introducing themselves to the seller and explaining why they liked the home so much. After reviewing 13 offers, including one from an all-cash investor, the seller chose the letter-writer’s offer.

New regulations enacted last year by the Federal Housing Administration to limit its exposure to risk forced many sellers to cut back on the amount of assistance on buyers’ closing costs. Sellers are now limited to no more than six percent of the loan amount.

Underwriting standards on conventional mortgages also have the effect of limiting the amount sellers can contribute.

In recent years many lenders have disallowed seller paid closing costs on 100 percent financed home loans because of the high foreclosure rate.

However, seller paid closing costs are typically limited to 6 percent of the loan amount at 90 percent loan-to-value or lower, 3 percent between 90-95 percent, and then usually 3 percent for 100 percent loan-to-value.

Some sellers bump up the home sales price to pay for concessions. However the buyer will need to get the higher amount he will need to borrow covered by the appraisal and he will have to meet increased debt-to-income ratio in order to close his loan.

The demise of concessions will make buying and selling a little simpler and more rational. As one observed asked, “Why would anyone selling a home pay the home buyer to buy it?”

For more information, visit www.realestateeconomywatch.com

Declining Home Inventory Affecting Sales, by Mortgage Implode Blog


 

 

This past week, several reports were released, all of which showed that declining home inventory is affecting sales. This decline is creating a seller’s market in which multiple bids are being made to purchase homes. According to the National Association of Realtors, existing home sales fell 1% in December, but were still at the second highest level since November, 2009. Inventory of homes for sale fell 8.5 from November, the lowest level since January of 2001, and are down 21.6% from December of 2011.

Following that lead, pending home sales dropped 4.34% in December to 101.7 from 106.3 in November, yet was 6.9% higher than December, 2011, according to the National Association of Realtors. The Chief Economist at NAR stated that “supplies of homes costing less than $100,000 are tight in much of the country, especially in the West, so first time buyers have fewer options”. Mortgage ratesare still low, affordability is still there, but the available homes are dwindling. In the meantime, home prices are increasing at a faster pace. According to the latest S&P/Case-Shiller index for November, property values rose 5.5% from November of 2011 which was the highest year over year increase since August of 2006.

The cause of the low inventory can be attributed to several factors. For the week ending January 18th, loan applications increased 7.0% on a seasonally adjusted basis, according to the Mortgage Banker’s Association. The Refinance Index rose 8% with refinances representing 82% of all applications. The seasonally adjusted Purchase Index rose 3%, the highest level since May, 2010. Many homeowners have chosen a mortgage refinance instead of moving to another home which is one reason that inventory is down. In addition, many underwater homeowners have refinanced through the HARP program which is available for loans that were sold to Fannie Mae or Freddie Mac prior to June 1, 2009. These homeowners may not yet be in a position to sell their homes until they have gained back enough equity. As home prices increase, this will eventually happen. The same can be said for those who refinanced through the FHA streamline program which is offering reduced fees for loans that were endorsed prior to June 1, 2009. Refinancing through these two government programs, both available until the end of 2013, hit all time highs in 2012.

Home builders are busy, but not currently building new homes at the rate that was seen during the housing boom. According to the Census Bureau and the Department of Housing and Urban Development, total new homes sales in 2012 hit the highest level seen since 2009 and were up 19.9% from 2011. There was much progress made in 2012, but sales for new homes fell 7.3% in December.

On the down side, the Census Bureau reported that homeownership fell 0.6% to 65.4% during December, down from 65.5% at the end of October and 66% at the end of 2011. Homeownership reached a peak of 69.2% in 2004 and has been falling since that time. The latest Consumer Confidence index dropped to 58.6 which is the weakest since November of 2011. It was previously at a revised 66.7 in December. This fell more than expected and is due to the higher payroll tax that is taking more out of the pockets of consumers.

The housing market, which is still in recovery, remains fragile. The lack of inventory and the rise of home prices may affect its progress this year. As home prices increase, fewer consumers will be able to qualify for a home loan. Existing homeowners may choose to refinance remain where they are instead of purchasing another home. While jobless claims have fallen, there are still many consumers who are out of work or are working lower paid jobs. The housing market is dependent on jobs, not just for salaries, but for consumer movement from one area to another.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at about a 1 point origination fee.

 

 

http://ml-implode.com/viewnews/2013-01-30_DecliningHomeInventoryAffectingSales.html

 

 

Reasons To Attend Your Own Home Inspection, by Steph Nobel


As a home buyer , you can get a feel for whether a home’s systems and appliances are in working order. However, you can’t know for certain until after the home’s been inspected.

This is why real estate agents recommend that buyers hire a licensed home inspectors immediately after going into contract. It’s the best way to really know the home which you’re buying.

By definition, a home inspection is a top-to-bottom check-up of a home’s physical condition and systems, including a review of the structure, and its plumbing and electrical systems. Home inspections are not the same as a home appraisal, which is a valuation of the property.

When you commission a home inspection, you should be present for it. Here are 3 reasons why :

Seeing For Yourself  There’s a big difference between reading a report and seeing “live” what may be right or wrong with a home. With first-hand knowledge of a potential issue, you’ll be in a better position to determine whether a problem warrants contract cancellation, or whether it’s an additional negotiation point.

Discovering The Home Via a home inspection, you will learn where the systems reside within a home (e.g.; boiler room, garage), and how to operate them. This is a valuable educational opportunity and most inspectors are happy to share what they know. It’s also a chance to ask questions about maintenance and upkeep.

Better Understanding A home inspector’s job is to review and disclose the condition of the home. The inspector’s report, however, is just a summary on paper. In being present for the inspection, a buyer will be able to visualize and understand the report’s conclusions more clearly. This can make for more effective re-negotiations with the seller, in the event that damage or distress is identified.

So, what should you do during the home inspection? Your primary tasks are to watch, listen, learn and ask questions. A professional home inspector will welcome your participation in the process.

MultnomahForeclosures.com Updated with New Notice of Default Lists



Visit MultnomahForeclosures.com for the notice of default lists (Homes in Foreclosure) for Multnomah County and other Oregon counties.

Multnomah Country Foreclosures
http://multnomahforeclosures.com

Fred Stewart
Stewart Group Realty Inc.
info@sgrealtyinc.com
http://www.sgrealty.net

Top court ruling leaves Oregon’s residential real estate market in limbo, by Thomas Hillier, Davis, Tremain Wright,


In a ruling the Oregon Supreme Court will soon review, the Oregon Court of Appeals on July 18 issued a major decision.The case, Niday v. Mortgage Electronic Registration Systems Inc., et al, held that MERS, when acting as a nominee for a named lender, is not a beneficiary under Oregon law. The practical effect of the holding is that any trust deed naming MERS the beneficiary may not be foreclosed in the name of MERS by the more expedient nonjudicial method.

 

A little context is in order.

In 1959, to remain competitive for loan dollars, Oregon adopted the Oregon Trust Deed Act to establish trust deeds as a real estate security instrument. For lenders needing to foreclose, the act created a summary, nonjudicial procedure that bypassed the courts and allowed no redemption rights for borrowers. Foreclosure previously was a judicial process taking two years or more to complete; now it could be done in six months with the summary procedure.

Lenders were happy because the time to liquidate a non-performing loan was substantially reduced. Borrowers benefited because there was no right to a deficiency if the debt exceeded the value of the property and borrowers could cure defaults during the foreclosure process by paying only the amount in arrears rather than the full loan balance.

Trust deeds quickly became the favored real estate security instrument.

In 1993, in part to respond to a growing practice wherein lenders were bundling loans secured by trust deeds and selling them in secondary markets, a group of mortgage industry participants formed MERS and the MERS system.

Anytime a loan is sold from one member of the MERS system to another, the sale is tracked using the MERS system. MERS, the named beneficiary as nominee for the original lender and its assigns, remains the beneficiary as the loan is sold and becomes an agent of the new note owner. With no change to the named beneficiary, there is nothing to publicly record, an administrative convenience accomplishing a central purpose of MERS.

As MERS grew in acceptance, so did its popularity. Nationwide, there are more than 3,000 lender members of MERS that account for approximately 60 percent of all real estate secured loans nationwide.

The onslaught of the Great Recession resulted in a tremendous spike in foreclosure activity. To defend foreclosure proceedings, borrowers challenged the authority of MERS, in its own name, to foreclose non-judicially.

Because the trust deed is a creature of statute, the statutory elements allowing a nonjudicial foreclosure must be followed strictly. One such element is the requirement that the name of the beneficiary and any assignee be in the public record. Niday argued that the lender, not MERS, was the beneficiary. MERS countered that it was the named beneficiary in the trust deed and had the contractual right to foreclose as nominee of the lender and its assigns.

The court sided with Niday, holding that MERS is not a “beneficiary” as defined by the act. The court wrote that the beneficiary is “the person to whom the underlying, secured obligation is owed.” It reasoned that because the lender is owed the money, that party is the beneficiary. Only the person to whom the obligation is owed and whose interest is of record may legally prosecute a nonjudicial foreclosure.

What does all of this mean? Maybe nothing if the Supreme Court finds that the Court of Appeals defined “beneficiary” too narrowly.

Short of that, many issues arise. What is the effect on completed nonjudicial foreclosures of MERS trust deeds? Such sales may be void, in which case the ownership and right to possession of thousands of foreclosed properties fall into legal limbo. Perhaps the sales are only voidable, requiring a lawsuit by the borrower within a limited time to challenge the foreclosure sale.

Titles may now be in doubt for people who bought properties either at a foreclosure sale or further along the line. Also, no market may exist for these properties if title insurers choose not to insure titles until there is some clarity.

Going forward, will MERS lenders do business in Oregon? And if so, at what cost? Loans may be more expensive to administer because they either require that all assignments be documented and recorded or foreclosure via the more expensive judicial method. As such, loans in Oregon could demand higher interest rates.

Courts will see a sharp increase in the number of judicial foreclosure filings; it’s happening in Multnomah County already. An already overcrowded judicial system will gain additional burdens.

The Legislature could step in to fix the issue by clarifying the definition of “beneficiary” to include a nominee of the lender, such as MERS. But is there political will to legislate a solution that, on the surface, seems to benefit lenders?

A practice that for many years roamed freely under the radar has suddenly exploded to the surface, leaving the mortgage industry in limbo. Quick answers to the numerous issues now pending are imperative to restore certainty to real estate markets.