Way back in the olden days…way back in 2007, homes all across the metro area were selling in a matter of days. And sometimes a home had multiple buyers driving the purchase price higher than what the sellers were asking.
Today this seldom happens because there are so many homes available for purchase buyers can find just about anything they want at a price they are willing to pay. The market changed when the housing bubble burst. Almost immediately, foreclosures diluted home values in neighborhoods throughout the city. And buyers waited; like vultures waiting for the wounded animal to die, they waited to purchase watching to see just how low home prices would go. And some are still waiting.
Many of the realtors I talk with tell horror stories of buyers looking at thirty and forty properties and still not making a serious offer. When they ask what their customers are looking for, they get the response, “we’re waiting for the price to drop”. And for the sellers whose homes remain unsold on the market month after month, keeping the house in “showroom condition” becomes impossible.
So what’s a seller to do? My network of realtors offers the following 8 ways sellers can lose a buyer. I offer these to you in hopes that you will not repeat the same mistakes that have cost many a seller a closed contract.
Unappealing Curbside View. Think of this as your home’s handshake. The way your home looks when potential buyers drive up makes an impression that sticks with the buyers. Trimming all trees and bushes as well as edging the yard and putting fresh mulch in the beds is a must. Power washing the exterior to remove wasp and mud dauber nests is an absolute must.
Clutter with chaos. Most people looking to buy a home have outgrown the one they are in. This usually means their home is cluttered and chaotic. That’s why closets should be only half filled and nothing should be on the floor. The rest of the house should be dressed according to the rule of three. Kitchen – no more than three appliances on the counter top. Bookshelves – one third books, another third pictures and vases, and the final third empty.
Dated fixtures. Most sellers take their refrigerators and washer and dryers but leave the oven and range. These fixtures aren’t cheap, but if they are too outdated, they can be a definite cause your buyer’s eyes to roll. Those old ceiling fans may still work, but are they older than your average buyer? If so, it would be a good idea to replace them.
Wallpaper. Grandma may have had it, and you may have grown up with it in your room. Okay, you may even like it yourself. But it’s a definite fashion faux pas for today’s buyers.
Acoustic ceiling. It really doesn’t matter if the ceiling is that old acoustic ceiling tile or the blown on glitter globs of popcorn, it puts off buyers. There are other homes as nice as yours and priced like yours but look better than yours because they took the time to remove the old acoustic ceiling.
Honest dishonesty. How many times have you read something like this? “Nestled in a quiet corner of the neighborhood, the rustic romance of this home makes it a stand out from other area homes for sale. Seller offers liberal allowance for buyer’s choice updates.” What all this means is that this home sits in a cul-de-sac sandwiched between two other homes leaving a very small pie shaped front yard. It’s in a quiet part of the neighborhood because the houses on either side of it have been foreclosed and vacant for nine months. It’s described as rustic, which really should have been rusting. Honest dishonesty only puts off serious buyers. Just be truthful.
Busy body seller. Walk in to just about any large furniture store in the city and within seconds you’ll be met by a sales person who won’t leave you alone. Tell them you’re just looking and they’ll ask thirty questions about size, shape and color. When people come to look at your home, don’t be one of those sales people. In fact, it’s best to leave the house.
Wednesday, January 27, 2010
Friday, January 22, 2010
Mortgage Expectations for 2010
The questions on most home owners minds are; “When will we see an end to the current housing crisis?” “How much longer will lenders remain skeptical?” “What are interest rates going to do?” “Is the housing market going to show signs of loosing up this year?” “Even with the Federal tax credit, is it time to buy a new home?”
We’ve been in our current housing slump for about three years now; at least we’ve been hearing about it in the news for at least that long. Recently there have been small but not insignificant signs that the real estate market is stabilizing. The number of home sales is up, housing inventories are showing signs of decline and prices of homes are beginning to plateau.
Stiffer Standards. There’s no doubting that lenders have tightened their qualification standards over the past two years. And for good reason. Their “too loose” lending standards in part fueled the inflated housing bubble. Then as the bubble popped and banks began realizing huge losses they began tightening lending standards on all borrowers. Now with unemployment at historic highs along with mortgage delinquencies, don’t expect lender’s to relax their guidelines, at least until after 2010.
FICO Scores. That’s your credit score. Up until two years ago all that was needed to get a great interest rate was a FICO score of 640 or better. Now that number has jumped to 720 and higher. I still regularly talk with people who want a “stated income mortgage”. Ain’t no such animal any more. Even with credit scores in the 800’s, you’ll still have to verify every dollar of your income and assets in order to qualify for a home loan. Everyone should monitor their credit regularly to check for errors. The Fair and Accurate Credit Transactions Act entitles consumers to one free credit report from each of the three major credit report bureaus each year. These bureaus are known as, Transunion, Experian and Equifax, and the reports are available at: www.annualcreditreport.com.
Higher Down Payment. Part of the reason we are in our current housing troubles is because lenders allowed borrowers to purchase homes with no down payment. With no “skin in the game” it was much easier for many home owners to walk away from their home mortgage obligations when finances got tight. On this subject also, I still regularly field questions on how people can get into a home with no money down. Minimum down payments are 3.5% with loans backed by the Federal Housing Administration (FHA). And conforming lenders are requiring down payments of up to 20%. If lenders become convinced that home prices are back on a permanent rise, they could lower down payment standards, but I wouldn’t look for this to happen anytime in 2010.
Changes in FHA. Because conventional loan standards have tightened so rapidly, borrowers by the thousands have flocked to FHA loans. Approximately 29% of our nation’s home loans are FHA loans. That’s up from about 3% (that’s right, three-percent) in 2006. And now, even the FHA is beginning to tighten their requirements. Over the past year minimum down payments have increased to 3.5% and the required up front mortgage insurance has increased from 1.5% of the loan amount to 1.75%. A recent announcement states that this percentage will soon increase to 2.25%.
Rising Rates. Just about all leading advisors to the housing industry believe that mortgage interest rates will without doubt trend upward this year. Last year the Federal Reserve announced plans to purchase assist Fannie Mae and Freddie Mac by purchasing some of their debt and mortgage-backed securities. After these actions, home mortgage interest rates fell to historic lows. Keep in mind that this plan by the Fed is scheduled to expire at the end of the first quarter of this year and unless private demand for mortgage-backed securities strengthens, rates will rise. The present expiration date on the Fed’s current action is an extension and should the market require continued Fed involvement to keep rates low and spur on further recovery, another extension could be forthcoming. No promises…just a thought.
We’ve been in our current housing slump for about three years now; at least we’ve been hearing about it in the news for at least that long. Recently there have been small but not insignificant signs that the real estate market is stabilizing. The number of home sales is up, housing inventories are showing signs of decline and prices of homes are beginning to plateau.
Stiffer Standards. There’s no doubting that lenders have tightened their qualification standards over the past two years. And for good reason. Their “too loose” lending standards in part fueled the inflated housing bubble. Then as the bubble popped and banks began realizing huge losses they began tightening lending standards on all borrowers. Now with unemployment at historic highs along with mortgage delinquencies, don’t expect lender’s to relax their guidelines, at least until after 2010.
FICO Scores. That’s your credit score. Up until two years ago all that was needed to get a great interest rate was a FICO score of 640 or better. Now that number has jumped to 720 and higher. I still regularly talk with people who want a “stated income mortgage”. Ain’t no such animal any more. Even with credit scores in the 800’s, you’ll still have to verify every dollar of your income and assets in order to qualify for a home loan. Everyone should monitor their credit regularly to check for errors. The Fair and Accurate Credit Transactions Act entitles consumers to one free credit report from each of the three major credit report bureaus each year. These bureaus are known as, Transunion, Experian and Equifax, and the reports are available at: www.annualcreditreport.com.
Higher Down Payment. Part of the reason we are in our current housing troubles is because lenders allowed borrowers to purchase homes with no down payment. With no “skin in the game” it was much easier for many home owners to walk away from their home mortgage obligations when finances got tight. On this subject also, I still regularly field questions on how people can get into a home with no money down. Minimum down payments are 3.5% with loans backed by the Federal Housing Administration (FHA). And conforming lenders are requiring down payments of up to 20%. If lenders become convinced that home prices are back on a permanent rise, they could lower down payment standards, but I wouldn’t look for this to happen anytime in 2010.
Changes in FHA. Because conventional loan standards have tightened so rapidly, borrowers by the thousands have flocked to FHA loans. Approximately 29% of our nation’s home loans are FHA loans. That’s up from about 3% (that’s right, three-percent) in 2006. And now, even the FHA is beginning to tighten their requirements. Over the past year minimum down payments have increased to 3.5% and the required up front mortgage insurance has increased from 1.5% of the loan amount to 1.75%. A recent announcement states that this percentage will soon increase to 2.25%.
Rising Rates. Just about all leading advisors to the housing industry believe that mortgage interest rates will without doubt trend upward this year. Last year the Federal Reserve announced plans to purchase assist Fannie Mae and Freddie Mac by purchasing some of their debt and mortgage-backed securities. After these actions, home mortgage interest rates fell to historic lows. Keep in mind that this plan by the Fed is scheduled to expire at the end of the first quarter of this year and unless private demand for mortgage-backed securities strengthens, rates will rise. The present expiration date on the Fed’s current action is an extension and should the market require continued Fed involvement to keep rates low and spur on further recovery, another extension could be forthcoming. No promises…just a thought.
Thursday, January 14, 2010
RESPA Rules Require New Forms
RESPA stands for Real Estate Settlement Procedures Act and was first enacted in 1974 to protect consumers from unnecessary charges associated with securing home mortgage financing. These rules are constantly under scrutiny and now, new Federal mortgage rules have gone into effect beginning January 1, 2010. These new rules were introduced after over two years of research and interviews by the Department of Housing and Urban Development and the Federal Reserve into better ways to protect the interests and rights of borrowers.
The new rules are designed to help consumers shop for and find the best loan for their particular situation. The rules caused a re-creation of the Good Faith Estimate of Closing Costs as well as the final HUD-1 or Settlement Statement. The new forms in their original format are a requirement for every new residential home mortgage originated after January 1st of this year. The forms break down the costs of every home mortgage in the simplest terms and make it all but impossible for lenders to hide fees.
It sounds contradictory, but the new GFE (Good Faith Estimate) has been simplified and yet lengthened from a single legal size sheet to three letter size sheets. (This form may be viewed on-line at: http://www.hud.gov/content/releases/goodfaithestimate.pdf).
Page one of the new GFE gives the borrower an overview of the terms of the mortgage they are considering as well as a proposed interest rate and fee summary. Federal law now mandates that these costs be good for a minimum of 10 days. This is to give the borrower time to shop for better loan terms and or lower costs.
At the bottom of page one each lender must record the borrower’s proposed adjusted origination charges and the total for all other settlement services. Then these two sums are totaled to reveal the borrower’s total settlement charges. Once these charges have been totaled and a rate has been locked, Federal law mandates that they may not increase at closing.
The box at the top of page two shows the borrower how the lender arrived at the adjusted origination charges. The first figure is the lender’s origination charge and must include ALL of the lenders origination charges including: broker fees and charges, application fees, underwriting and processing fees, tax service fees, flood certification fees, etc. In short, all fees charged by the lender for this loan must be lumped into the dollar amount listed on this line.
Just below this figure the lender must declare the borrower’s credit or charge (points) for the specific interest rate chosen. One of three choices must be made. a) “The credit or charge for the interest rate of ____% is included in our origination charge” (see the figure above); b) “You receive a credit of $_______ for the interest rate of _____%. This credit reduces your settlement charges”; c) “You pay a charge of $____ for this interest rate of ____%. This charge (points) increases your total settlement charges”. The sum of these two figures becomes the borrower’s adjusted origination charge and is transferred to the bottom of page one.
The remainder of page two of the GFE is dedicated to other charges associated with the loan such as title fees and other services required by the lender, such as appraisal, inspections, and FHA/VA funding fees. And the new RESPA guidelines extend greater protection to borrowers by limiting many of these services to a 10% increase over the figures quoted in the GFE.
Once the borrower provides enough information for a full application, Federal law mandates that the GFE be provided to the borrower within three business days. The GRE has become a legal and binding document between the lender and the borrower. For this reason lenders will not be allowed to provide a Good Faith Estimate unless a complete application has been taken.
The following information is required for a complete application: Borrower(s) name, Social Security number of Tax ID Number, property address, monthly income, property value or “best estimate”, and loan amount (including interest rate and product type).
The look and feel of the new GFE is quite a bit different from the form that has been in use for so many years. But borrowers will quickly become comfortable with the additional protection it provides them and the ease with which it allows them to compare financing costs between different lenders.
The new rules are designed to help consumers shop for and find the best loan for their particular situation. The rules caused a re-creation of the Good Faith Estimate of Closing Costs as well as the final HUD-1 or Settlement Statement. The new forms in their original format are a requirement for every new residential home mortgage originated after January 1st of this year. The forms break down the costs of every home mortgage in the simplest terms and make it all but impossible for lenders to hide fees.
It sounds contradictory, but the new GFE (Good Faith Estimate) has been simplified and yet lengthened from a single legal size sheet to three letter size sheets. (This form may be viewed on-line at: http://www.hud.gov/content/releases/goodfaithestimate.pdf).
Page one of the new GFE gives the borrower an overview of the terms of the mortgage they are considering as well as a proposed interest rate and fee summary. Federal law now mandates that these costs be good for a minimum of 10 days. This is to give the borrower time to shop for better loan terms and or lower costs.
At the bottom of page one each lender must record the borrower’s proposed adjusted origination charges and the total for all other settlement services. Then these two sums are totaled to reveal the borrower’s total settlement charges. Once these charges have been totaled and a rate has been locked, Federal law mandates that they may not increase at closing.
The box at the top of page two shows the borrower how the lender arrived at the adjusted origination charges. The first figure is the lender’s origination charge and must include ALL of the lenders origination charges including: broker fees and charges, application fees, underwriting and processing fees, tax service fees, flood certification fees, etc. In short, all fees charged by the lender for this loan must be lumped into the dollar amount listed on this line.
Just below this figure the lender must declare the borrower’s credit or charge (points) for the specific interest rate chosen. One of three choices must be made. a) “The credit or charge for the interest rate of ____% is included in our origination charge” (see the figure above); b) “You receive a credit of $_______ for the interest rate of _____%. This credit reduces your settlement charges”; c) “You pay a charge of $____ for this interest rate of ____%. This charge (points) increases your total settlement charges”. The sum of these two figures becomes the borrower’s adjusted origination charge and is transferred to the bottom of page one.
The remainder of page two of the GFE is dedicated to other charges associated with the loan such as title fees and other services required by the lender, such as appraisal, inspections, and FHA/VA funding fees. And the new RESPA guidelines extend greater protection to borrowers by limiting many of these services to a 10% increase over the figures quoted in the GFE.
Once the borrower provides enough information for a full application, Federal law mandates that the GFE be provided to the borrower within three business days. The GRE has become a legal and binding document between the lender and the borrower. For this reason lenders will not be allowed to provide a Good Faith Estimate unless a complete application has been taken.
The following information is required for a complete application: Borrower(s) name, Social Security number of Tax ID Number, property address, monthly income, property value or “best estimate”, and loan amount (including interest rate and product type).
The look and feel of the new GFE is quite a bit different from the form that has been in use for so many years. But borrowers will quickly become comfortable with the additional protection it provides them and the ease with which it allows them to compare financing costs between different lenders.
Friday, January 8, 2010
What's In Store for Mortgages in 2010?
2008 was the year of the foreclosure when we saw record numbers of defaulted home loans and people simply walking away from their homes. 2009 was the year of refinance with interest rates hovering at insanely low rates in the low to mid 4% range. 2010 appears to be the year of the home purchase.
The Federal “First Time Homebuyer Tax Credit” program was extended until the end of April and already this stimulus seems to be having the desired affect on depressed housing markets across the country. Locally, this program continues to encourage first time home buyers to jump into the market. And with the addition of the $6,500 tax credit for subsequent home buyers the hope is that the housing market will be more brisk, at least for the first half of 2010.
What shape is your financial house in? Until just a few months ago the best home loans required a minimum credit score of 720. Most lenders now require a minimum score of 740 for the best rates. And for folks who have these scores need to be prepared to provide their lender with more documentation than ever. Higher credit scores will still open the door to the lowest interest rates, but before the lender will let you have the rates, even people with ultra high scores will be required to provide more documentation than ever before.
The days of the no-doc or low-doc home mortgages are gone. Borrowers with high credit scores used to be able to “state” the income they made and still get great rates. Not any more. Borrowers with scores in the 800’s are now required to validate every dollar of income and assets before being approved for a home loan.
Your credit scores may be fine, but what is your debt to income ratio? An easy way to discover this number is to add up all the monthly payments showing on your credit report and divide that number by your gross monthly income. If that is above 40% that could limit the amount the lender is willing to extend to you.
What about a down payment? In the housing hey-day, home buyers routinely put nothing down to buy their home. 100% single loans were an every day happening. Other buyers stacked piggy-back loans to avoid mortgage insurance. Now in all but a few instances, 100% financing is gone. Lenders require most home buyers to bring a minimum down payment to closing. FHA still requires a relatively small 3.5% down payment and many lenders still require a minimum credit score of 620 to qualify.
Other conventional financing may have slightly lower interest rates, but also require a more substantial down payment of 10% or more. For those home buyers who are “rolling over” the equity from their existing home, this won’t be an issue.
The down payment hurdle can be made easier by the generosity of family who, in certain circumstances, can “gift” that amount to other family members purchasing a home. The gift must come from a bone-fide family member who must also sign a letter declaring the money to be a gift with no repayment required. Check with your own lender for the specifics of the gifting of down payment monies.
Is the timing right for you to buy? If you are considering the purchase of your first home you should plan on owning that home for at least three to five years. Some experts believe that housing prices still have a way to fall before they turn around. Our local market doesn’t seem to support this concern, but just to be on the safe side, it would be wise to buy the home only if you plan on living there for at least three to five years.
If your plan is to buy a home, fix it up and sell it within a year or less, you had better find the right house for the right price and know what you’re doing. Even the pro’s in years past who made their living “flipping” houses aren’t doing much of this type home buying.
The Federal “First Time Homebuyer Tax Credit” program was extended until the end of April and already this stimulus seems to be having the desired affect on depressed housing markets across the country. Locally, this program continues to encourage first time home buyers to jump into the market. And with the addition of the $6,500 tax credit for subsequent home buyers the hope is that the housing market will be more brisk, at least for the first half of 2010.
What shape is your financial house in? Until just a few months ago the best home loans required a minimum credit score of 720. Most lenders now require a minimum score of 740 for the best rates. And for folks who have these scores need to be prepared to provide their lender with more documentation than ever. Higher credit scores will still open the door to the lowest interest rates, but before the lender will let you have the rates, even people with ultra high scores will be required to provide more documentation than ever before.
The days of the no-doc or low-doc home mortgages are gone. Borrowers with high credit scores used to be able to “state” the income they made and still get great rates. Not any more. Borrowers with scores in the 800’s are now required to validate every dollar of income and assets before being approved for a home loan.
Your credit scores may be fine, but what is your debt to income ratio? An easy way to discover this number is to add up all the monthly payments showing on your credit report and divide that number by your gross monthly income. If that is above 40% that could limit the amount the lender is willing to extend to you.
What about a down payment? In the housing hey-day, home buyers routinely put nothing down to buy their home. 100% single loans were an every day happening. Other buyers stacked piggy-back loans to avoid mortgage insurance. Now in all but a few instances, 100% financing is gone. Lenders require most home buyers to bring a minimum down payment to closing. FHA still requires a relatively small 3.5% down payment and many lenders still require a minimum credit score of 620 to qualify.
Other conventional financing may have slightly lower interest rates, but also require a more substantial down payment of 10% or more. For those home buyers who are “rolling over” the equity from their existing home, this won’t be an issue.
The down payment hurdle can be made easier by the generosity of family who, in certain circumstances, can “gift” that amount to other family members purchasing a home. The gift must come from a bone-fide family member who must also sign a letter declaring the money to be a gift with no repayment required. Check with your own lender for the specifics of the gifting of down payment monies.
Is the timing right for you to buy? If you are considering the purchase of your first home you should plan on owning that home for at least three to five years. Some experts believe that housing prices still have a way to fall before they turn around. Our local market doesn’t seem to support this concern, but just to be on the safe side, it would be wise to buy the home only if you plan on living there for at least three to five years.
If your plan is to buy a home, fix it up and sell it within a year or less, you had better find the right house for the right price and know what you’re doing. Even the pro’s in years past who made their living “flipping” houses aren’t doing much of this type home buying.
What
2008 was the year of the foreclosure when we saw record numbers of defaulted home loans and people simply walking away from their homes. 2009 was the year of refinance with interest rates hovering at insanely low rates in the low to mid 4% range. 2010 appears to be the year of the home purchase.
The Federal “First Time Homebuyer Tax Credit” program was extended until the end of April and already this stimulus seems to be having the desired affect on depressed housing markets across the country. Locally, this program continues to encourage first time home buyers to jump into the market. And with the addition of the $6,500 tax credit for subsequent home buyers the hope is that the housing market will be more brisk, at least for the first half of 2010.
What shape is your financial house in? Until just a few months ago the best home loans required a minimum credit score of 720. Most lenders now require a minimum score of 740 for the best rates. And for folks who have these scores need to be prepared to provide their lender with more documentation than ever. Higher credit scores will still open the door to the lowest interest rates, but before the lender will let you have the rates, even people with ultra high scores will be required to provide more documentation than ever before.
The days of the no-doc or low-doc home mortgages are gone. Borrowers with high credit scores used to be able to “state” the income they made and still get great rates. Not any more. Borrowers with scores in the 800’s are now required to validate every dollar of income and assets before being approved for a home loan.
Your credit scores may be fine, but what is your debt to income ratio? An easy way to discover this number is to add up all the monthly payments showing on your credit report and divide that number by your gross monthly income. If that is above 40% that could limit the amount the lender is willing to extend to you.
What about a down payment? In the housing hey-day, home buyers routinely put nothing down to buy their home. 100% single loans were an every day happening. Other buyers stacked piggy-back loans to avoid mortgage insurance. Now in all but a few instances, 100% financing is gone. Lenders require most home buyers to bring a minimum down payment to closing. FHA still requires a relatively small 3.5% down payment and many lenders still require a minimum credit score of 620 to qualify.
Other conventional financing may have slightly lower interest rates, but also require a more substantial down payment of 10% or more. For those home buyers who are “rolling over” the equity from their existing home, this won’t be an issue.
The down payment hurdle can be made easier by the generosity of family who, in certain circumstances, can “gift” that amount to other family members purchasing a home. The gift must come from a bone-fide family member who must also sign a letter declaring the money to be a gift with no repayment required. Check with your own lender for the specifics of the gifting of down payment monies.
Is the timing right for you to buy? If you are considering the purchase of your first home you should plan on owning that home for at least three to five years. Some experts believe that housing prices still have a way to fall before they turn around. Our local market doesn’t seem to support this concern, but just to be on the safe side, it would be wise to buy the home only if you plan on living there for at least three to five years.
If your plan is to buy a home, fix it up and sell it within a year or less, you had better find the right house for the right price and know what you’re doing. Even the pro’s in years past who made their living “flipping” houses aren’t doing much of this type home buying.
The Federal “First Time Homebuyer Tax Credit” program was extended until the end of April and already this stimulus seems to be having the desired affect on depressed housing markets across the country. Locally, this program continues to encourage first time home buyers to jump into the market. And with the addition of the $6,500 tax credit for subsequent home buyers the hope is that the housing market will be more brisk, at least for the first half of 2010.
What shape is your financial house in? Until just a few months ago the best home loans required a minimum credit score of 720. Most lenders now require a minimum score of 740 for the best rates. And for folks who have these scores need to be prepared to provide their lender with more documentation than ever. Higher credit scores will still open the door to the lowest interest rates, but before the lender will let you have the rates, even people with ultra high scores will be required to provide more documentation than ever before.
The days of the no-doc or low-doc home mortgages are gone. Borrowers with high credit scores used to be able to “state” the income they made and still get great rates. Not any more. Borrowers with scores in the 800’s are now required to validate every dollar of income and assets before being approved for a home loan.
Your credit scores may be fine, but what is your debt to income ratio? An easy way to discover this number is to add up all the monthly payments showing on your credit report and divide that number by your gross monthly income. If that is above 40% that could limit the amount the lender is willing to extend to you.
What about a down payment? In the housing hey-day, home buyers routinely put nothing down to buy their home. 100% single loans were an every day happening. Other buyers stacked piggy-back loans to avoid mortgage insurance. Now in all but a few instances, 100% financing is gone. Lenders require most home buyers to bring a minimum down payment to closing. FHA still requires a relatively small 3.5% down payment and many lenders still require a minimum credit score of 620 to qualify.
Other conventional financing may have slightly lower interest rates, but also require a more substantial down payment of 10% or more. For those home buyers who are “rolling over” the equity from their existing home, this won’t be an issue.
The down payment hurdle can be made easier by the generosity of family who, in certain circumstances, can “gift” that amount to other family members purchasing a home. The gift must come from a bone-fide family member who must also sign a letter declaring the money to be a gift with no repayment required. Check with your own lender for the specifics of the gifting of down payment monies.
Is the timing right for you to buy? If you are considering the purchase of your first home you should plan on owning that home for at least three to five years. Some experts believe that housing prices still have a way to fall before they turn around. Our local market doesn’t seem to support this concern, but just to be on the safe side, it would be wise to buy the home only if you plan on living there for at least three to five years.
If your plan is to buy a home, fix it up and sell it within a year or less, you had better find the right house for the right price and know what you’re doing. Even the pro’s in years past who made their living “flipping” houses aren’t doing much of this type home buying.
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