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Pam Parton and Joanna Wooley

Archive for the 'Mortgage News' Category

Short Sale? Foreclosure? What Should I Do?

It seems that everyone today either knows of someone or unfortunately is currently facing one of these dreaded situations. These two distasteful terms have unfortunately become an epidemic of common household words in too many homes across the nation.

But do we really know what they mean? Do we know what the overall affect of either of these choices will be? Homeowners across America are agonizing over these questions. Which is the worst or best of the two evils? If you are a homeowner and find yourself in a situation that you no longer have the ability to make the payments on your home, and the value of your home is less than you owe, you might consider trying to negotiate with the lender to forgive a portion of your loan and sell the home at it’s current value to avoid foreclosure.

A good Realtor will be able to best help you with this endeavor. The task is not an easy one and it is not for the faint of heart. You will need patience and stamina to endure the process of a short sale. Again, it is your experienced Realtor that will help you through this maze and work on your behalf with the lender to approve the sale of your home.

The affect of selling your home for less than you owe does not come with out derogeratory credit consequences, however, the alternative, foreclosure, can be far worse and take a longer period of time to recover and repair that precious credit score. Various sources claim the hit on your credit score from a short sale will be between 80-100 points, and you will be able to buy a home again in about 18 months. With a foreclosure the hit on your credit is between 200-400 points and it will take at least 3 years before you will be able to purchase again. There may also be tax implications on the amount forgiven by the lender. Every situation is different, you should always consult with a tax accountant or an attorney before making the decision to move forward on either of these choices.

Is there a Silver Lining to all of this doom and gloom? There is if you are a buyer. Right now home affordablity is higher than it has been in years. Which option is better, a short sale, foreclosure, bank owned, REO, or lender owned property? The answer is that any of these options can mean that the buyer has a good chance of owning a home at very affordable price. The difference to the buyer is that the short sale property will most likely be the most frustrating property to try to purchase because there is a possibility that the sale may never take place. If it does go through, the process and the time period between purchase offer and response from the lender can be up to 2 months or more.

During this time period, other offers may be accepted by the seller and submitted to the lender for approval, and all along your offer is still sitting there, you have no idea if someone else has out bid you or if the lender will approve any of the offers. In the mean time, there will be other homes that you have lost out on because you fell in love with the house you have the offer on and have stopped looking because you have your hopes so high on this house that nothing else will do. With that being said, it does not mean that you will not get this house, just that you must have patience and stamina, just like the sellers to endure the process.

Purchasing a foreclosure, bank owned, REO, or lender owned property (all mean the same), can be a somewhat easier process with the help of your experienced Realtor. The down side of purchasing a foreclosed property is that the terms of the sale can be a bit stiff and unflexible such as, no transfer disclosures because the current owner (the lender) has no knowledge of the condition of the property past or present, the home is sold as is, with no repairs, home warrenty and sometimes the buyer will even need to purchase their own title policy. These terms will need to be agreed on before the lender will even consider which offer to accept.

If your offer is accepted the escrow period is usually 30 days or less and you can be in your new home immediately after the close of escrow because the home will already be vacant.
Your best bet is to contact a qualified Realtor to assist you in the purchase or sale of your home and help you minimize your frustrations and keep you out of legal hot water.

FHA Loans are Making a Strong Comeback!

Buying a new home is an exciting time, it also takes a great deal of time and decision making. Finding the right mortgage is just as important and in today’s market this can be a very challenging task. We are finding more than ever that to qualify for a loan the rules are becoming more and more stringent. I am very happy to let you know that it might be a little easier than you think with the new FHA qualifications.

With the recent problems suffered by sub prime mortgage lenders, FHA loans are making a strong comeback. It will be easier for many of us out there to qualify for an FHA loan than ever before, this is really GOOD NEWS. These loans are a useful alternative for first time home buyers and other home buyers with less than perfect credit.

There are far fewer restrictions for a FHA Loan Qualification compared to a standard mortage loan, and you can even apply if you have no credit history if you can prove that you have met past financial obligations.

Some of the qualifications are :

Low/no down payment (3% down)

100% Gift money ok

Overall credit not just Fico scores

High debt ratios

Bankruptcy needs to be at least 2 years old with continuing good credit

Foreclosures will need to be older than 3 years with continuing good credit

An FHA Loan can be assumed from a seller or passed onto a buyer

These are just a few of the qualifying factors - but it will certainly make borrowing easier for those with less than stellar credit or little downpayment to purchase their home.

FHA does not actually lend money, it insures that the total mortgage will be paid to the lender if the buyer defaults. It is always the decision of the private lender to decide whether or not to they will lend the money.

The FHA was established by the goverment to improve housing options back in 1934. Prior to this a down payment of typically 50% of the homes purchase price was required and had to be paid back between 1-5 years.

So if you’re thinking of buying in this great market, it might be worthwhile giving the FHA Loan some consideration.

Consumerism…Can The Economy Be Saved?

May 2nd, 2008 by Pam & Joanna
Categories: Mortgage News
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Dictionary.com defines consumerism as “the concept that an ever-expanding consumption of goods is advantageous to the economy.”

Starting today, the US Treasury will begin depositing rebate checks into taxpayer’s bank accounts. It is estimated that approximately 180 million households will receive some form of rebate from the US Treasury. Referred to as H.R. 5140, The Economic Stimulus Act of 2008 calls for rebate checks to be sent to qualified individuals and families, incentives for business investment, and the increase in the conforming and FHA loan limits.

Rebate checks will range from $300 to $1200 per household and could be higher for individuals and families with qualifying dependants. With consumer confidence at a 5 year low these rebate checks could be what the doctor ordered as far as reviving the ailing economy. For many consumers, the tax free rebate checks will offer some relief and help families cope with the rising costs of food and energy.

I’m sure many consumers will use the money to pay down debt or replenish their savings account and that will surely help boost consumer confidence in the near future. The US consumer has shown to be extremely resilient to rising costs and a shrinking labor force and we will continue to lead the rest of the world out of this global slowdown. After asking a few of my friends what they plan on doing with their rebate checks I have composed a small list of my favorite answers…

Take a small weekend vacation somewhere like Laughlin, Palm Springs, and/or Catalina Island.
Mostly for my guy friends.. purchase a new BBQ grill for the summer.
Deposit the money in the kids savings account.
New golf clubs. (my favorite answer!)
Get tickets to a Padres vs. Dodgers game and sit behind home plate.

Just as I suspected, the consumer does not need a good or logical reason to go out and spend; we just need a reason. After a little more thought I guess the rebate checks are a good idea that I initially was not in favor of. I hope for all our sake that this is a step in the right direction.