Hal's Mortgage Blog

A survey conducted by the National Association of Realtors found the following reasons why an open house may be a waste of time.

1. Low conversion rate - Realtors estimate that fewer than 1% of those attending an open house will buy that property. Furthermore, 54% of all recent buyers never attended an open house.
2. People who attend open houses aren't serious buyers - most are curious neighbors and "Lookey-Loos" or tire kickers. Many are six months or more from actually being ready to make an offer. You need to sell now.
3. Close to 90% of buyers start their search on the internet - they can see more home in 30 minutes than in a whole day of open houses.
4. Security - you may be opening your home to a burglar who is checking out the scene and will come back later when you're not home. Even worse, I personally know of a Realtor who was closing down the home she was sitting when a man arrived and asked if she would show it to him. She reopened it and once inside he attacked her brutally and then fled.

If you are a For Sale By Owner, an open house may be one of your only sources of marketing, just don't get your hopes too high.

If you have your home listed by a Realtor, you can understand why he/she may be reluctant to hold your home open. They may do so to show their good intentions and prove that they are willing to do whatever it takes, however be realistic if the results are less than you had hoped for.

Sure, especially if you have lots of cash.

Over the past several months I have qualified quite a few buyers who went out with their Realtor shopping for a home, expecting to get a great buy on a foreclosure. They made offers on properties only to lose out to investors who are cash buyers.

 
Many first time homebuyers are short on cash and need the seller to pay for some or all of the closing costs. This is the same as asking the seller to “discount” or take less for the property. In the case of bank owned foreclosures they may have already priced it at their bottom dollar.

 
Sellers like cash sales because they don’t have to worry about an appraisal and they can close the deal quicker. All-cash sales appear to be between 20 - 30% of resales recently especially in the lower end, entry level homes. I personally have never seen this many cash buyers.

 
What can you do to boost your chances of getting an offer accepted? 

1. Expect to pay full listing price or more if you need closing costs paid by the seller.
2. Come up with a larger down payment.
3. Look for HUD foreclosures. Investors are excluded from new listings for the initial offering stage.
4. Work with a Realtor who has a list of recent foreclosures being prepared for sale. That way you can get a jump on the competition.
5. Write a letter to the seller, to be presented with the offer, explaining why they should sell to you. It can’t hurt and it may help when there are multiple offers.
   
   

While down payment requirements have increased for some programs, it is still possible to buy a home with less than 5% down…or even NO money down.

For example, FHA offers a loan program that requires as little as 3.5% down. In addition, the VA and USDA offer loans that require no down payment. Of course, there are restrictions with each of these programs that can include maximum loan amounts based on your location with FHA loans, income and property requirements for those offered by the USDA, and your qualifying status as an eligible Veteran.

In addition to those programs, keep in mind that many sellers in today's market are willing to offer concessions, such as paying part or all of your closing costs. That can decrease the amount of funds you may be required to have to purchase your next home.

Here's a thought - suppose you buy a home with a zero down loan, then receive an $8,000 Tax Credit from the IRS as a First Time Homebuyer or $6,500 as someone who has previously owned a home in three of the last five years, didn't you just make money for buying a home?

That still boggles my mind but it's true. There are people doing it every day. 

Every now and then I run across a video clip that bears watching. Since prospective buyers’ credit is something I analyze daily, I want to pass this one along. Click on the link 7 Errors That Can Ruin Homebuyers’ Credit then give me a call for a free Tri-Merge report of all three bureaus plus a consultation on what you can do to improve your scores. Even scores above 700 can be improved by 30 to 50 points by using a trick or two. And it may take no more than 30 -45 days. Could save you a lot of money in interest over the life of your loan.

In a nutshell this is going to cost homebuyers MORE money.

While no "date" has been set, the press release said it would be late spring/early summer when these changes are expected to take place.

• Lower credit scores will require more down payment money
• Up Front Mortgage Insurance Premium (MIP) will increase from 1.75% to 2.25%
• Monthly Mortgage Insurance will increase from .50% to .55%
• Seller contributions will decrease from 6% to 3%.

Another reason to buy now rather than later!

To read the entire announcement go to FHA Policy Change

The good news is . . . there’s still time to qualify for the $8,000 Tax Credit as long as you get a home under contract by April 30, 2010 and close by June 30, 2010

The bad news . . . all right it’s not really bad news! It’s just that the refund is taking up to four months before you receive it. And by the way, no e-filing your return, it has to be paper.

Here’s a link to the NEW IRS 5405

http://www.irs.gov/pub/irs-pdf/f5405.pdf

When mortgage interest rates ranged in the double digits back in the l970’s, seller financing was rather popular. Once rates began to fall, it fell out of favor. Now that lending standards have become tighter, we may see seller financing rise in popularity again. It may pay to know the seller financing options possible.

Lease to Own or Lease with Option
In the past, this has been the most common of the seller financing options. A portion of a renter’s payments goes to help finance the eventual purchase of the home. Most agreements include some type of deposit that is not refundable if the buyer decides not to buy. There is also generally an agreed upon expiration date on the right to buy.

Partial Financing Option
Perhaps the buyer can qualify for a mortgage but not enough to buy a particular property. In this case, the seller can finance part of the cost of the home and the lender can finance the other part. Note however that lenders may not be so willing to help finance these types of purchases in a tight loan market.

Seller Contributions
This option is more popular than ever and almost seems expected by many buyers in the current market. Traditional lenders may be concerned about the amount that sellers contribute to the buyer’s purchase, and many are limiting that amount to 3% of the home’s purchase price.

If you have additional questions, consult your real estate agent and mortgage professional for answers.

Everybody knows late payments can hurt, but here's a short list of what you don't know.

• Maxed out credit card? - deduct 10 to 45 points
• Settled a debt for less than full amount? - deduct 45 to 125 points
• Foreclosure? - deduct 85 to 160 points
• Bankruptcy? - deduct 130 to 240 points
• And of course the proverbial 30 day late payment - deduct 60 - 110 points

What can you do turn it around? Get a copy of "Your Credit Score" - An insider's guide to credit scoring and home financing.

It's free - no obligation, just call or email

Steady employment is one of the factors an Underwriter will use in approving or denying your mortgage application.

If you have been employed in the same line of work for 2 years or more and a job change makes sense – higher pay, career advancement etc., then there may not be a problem. Just make sure you will have paycheck stubs for the last 30 days or more proving your current rate of pay. Also, a Verification of Employment with your new company may be required. Part of that VOE contains a statement of probability of future employment.

Thinking about going in to business for yourself? My advice – wait until after your loan closes. Here’s why. Self-employed individuals need two years tax returns to prove income. Most likely an average of those two years will be used as your net taxable income. Most self employed use every legal deduction available so the net taxable income does not always reflect the cash flow or spendable income.

Your lender may also request a copy of your tax return from the IRS on form 4506-T. I have had these come back with major discrepancies. One buyer prospect had never filed his tax return even though he provided signed copies to me.

The #1 reason given by potential homebuyers – they feel home prices have bottomed out. Could it be the market is poised for a slow and gradual recovery? Other reasons close behind were abundance of bargain priced foreclosures and fear of rising interest rates.

Who will these likely buyers be? First Time Home Buyers says the National Association of Realtors. Nearly 60% of all home purchases currently are FTHBs, under 34 years of age and living in the South or West.

Part of the increased activity is a result of the $8,000 Tax Credit. Now that it has been extended to purchases signed by April 30, 2010, Realtors here in Middle Tennessee are seeing good homes in the lower price range harder to find.

“Next year will clearly be better than this year,” says Mike Larson, Real Estate Analyst with Weiss Research. He predicts that the worst is over with a flat market leading up to 2012.

What should you do if you’re a buyer? Don’t sit on the sidelines too long. It’s still a buyer’s market but that advantage may be gradually shifting. If you’re ready to buy and it makes sense financially, don’t get caught looking in the rearview mirror.