First Time Homebuyers – Page 4

It’s a Long Ride on a Short Sale

Definitions: Short Sale

The definition of a short sale is when a homeowner owes more to their current mortgage lender than they can sell the house for on the open market and sells the house for the market price
after negotiating with their lender to accept less.

For example, Henrietta and John own a single family house. The balance on their current mortgage is $267,000. John lost his job and they wish to sell the house to relocate to another state for better employment opportunities. They invite local Realtors to make a “Listing Presentation” as to how much Henrietta and John’s house could sell for under current market conditions. The consensus among these Realtors is a price range of $195,000-$220,000.

Henrietta and John owe more than the house can be sold for. They retain the services of a local attorney who specializes in negotiating short sales. Their attorney then negotiates with their existing Lender to accept less than the $267,000 owed on the house and basically to accept payment based on whatever Henrietta and John can sell the house for.

The negotiating of the short sale is a complicated and difficult process. Henrietta and John’s attorney will need to present comprehensive income documentation to their Lender. The Lender will in turn conduct it’s own analysis of the value of the house and the merits of accepting Henrietta and John’s offer of less money rather than conducting a foreclosure proceeding.

Thanks to recent Federal Government initiatives, the process to negotiate a short sale has become easier. What used to take nearly a year to accomplish can now be negotiated in as little as 45 days, although the average processing time for a short sale approval is probably closer to six months.

When Henrietta and John receive the approval for their short sale, there will be some fundamental conditions in place.

1. Their Lender will receive ALL proceeds of the sale AFTER Henrietta and John have paid customary closing fees for their locale and real estate commissions and legal fees to their attorney.

2. They will not be allowed to receive any funds in their pocket.

3. Their Lender may reserve the right to obtain a “deficiency judgment” against Henrietta and John for the amount of the mortgage loan left unpaid by the approved short sale.

What does a short sale mean for a Homebuyer?

1. Be PATIENT. You may have a considerable waiting period from the time you sign a contract of sale to the point when the short sale is approved on the house you are buying.

2. Get your Mortgage Approval and MAINTAIN your financial status. Once your mortgage loan application is approved and your Lender issues a loan commitment, be sure your Income, Assets, and Credit stay the same as when you made your loan application. Because it may be some time before you close, your Lender will update your documentation used for the loan approval. If your financial situation changes, you may lose your approval altogether.

3. You can’t get Something For Nothing. Don’t think you can get a house in a short sale situation for “fire sale” prices. After all, the house didn’t get burned in a fire, the Homeowner simply owes more than current market prices will bear. If you offer substantially below the market price, chances are the Lender approving the short sale for the homeowner may counter your offer to a higher price. This is based on their independent analysis of market prices for similar homes in close proximity to the house you are buying.

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

Never Fall In Love With The House

RULE NUMBER ONE in my Playbook for First Time Buyers: NEVER FALL IN LOVE WITH THE HOUSE.

Of course, you often have no choice. The reason is simple: buying a home is a very emotional process. You’re going to LIVE there! You’ll create new life experiences and, frankly, that’s emotional.

But when you’re shopping for a home and you want to win at negotiations with a home Seller, or, you just want to be treated with respect by crazy aggressive real estate agents, you have to tamp down your emotions.

I believe in the negotiating tactic of “first one to leave the negotiating table wins.”

That’s really what I mean by “never fall in love with the house.”

How To WIN:

1. Move quickly: Offer your price promptly, don’t explain your price, and sit back and wait for the Seller’s response.
2. Be prepared to sign a purchase agreement (contract of sale) and get your home inspection immediately your Offer is accepted.
3. Watch the Seller’s reaction to your prompt, efficient moves.

Does the Seller respond in a timely manner?
Does the Seller’s real estate agent put up barriers to your Offer being presented/accepted?
Is communication between all parties clear and concise?
Are the other parties driving you kinda sorta NUTS with ridiculous statements and/or demands?

If you get a negative or confusing reaction to these focus points then you need to WALK AWAY. Let the Seller chase after you. IF the Seller is serious about selling the home, they’ll come running after you. IF they have unrealistic expectations on price and/or terms then your walking away is going to save you a lot of headaches.

Don’t fall in love with the house;

be prepared to walk away so you can get what you want.

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

Sunday Dinners

I was speaking to one of my clients yesterday. She has been shopping with her husband since January for the right house. They had two houses locked down in contract only to discover in both cases the Sellers had problems that prevented my clients from closing, even though their mortgage loans were approved.

I have learned one thing in my 23 years helping First Time Homebuyers and I shared that one thing with my client yesterday as a way to help her maintain her energy and optimism.

I told her, “Someday soon in your new house, when you are sitting down to a Sunday dinner with your family at your dining room table you will remember all the hard work, disappointment, crazy sellers, and challenges you had to overcome in order to buy your first home. You will look around that Sunday dinner table and think to yourself, ‘All that hard work was worth it.’”

It’s true: the thing I learned a long, long time ago, through my early experiences as a mortgage professional and through the challenges I faced buying my first home, the thing I learned is that all the hard work pays off. To sit down with your family to that traditional Sunday dinner in YOUR dining room in YOUR own house, oh yes, that’s when you truly reap the rewards from your hard work shopping for that house.

I encourage all of you to stick with it. You will find shopping for that home to be challenging, arduous, and filled with nail-biting anxiety. But it’s all worth it in the end.

Paying rent just isn’t worth it in the long run;

owning something that’s yours really is worth the work.

Think of your future Sunday dinners next time you are feeling

blue about the home buying experience.

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Ask Trevor A Question

Make an OFFER NOW

When negotiating on the purchase of your first home, I strongly advocate making an Offer as quickly as possible. Strike while the iron is hot!

I mean that you should make an Offer when you first visit

a home that meets the two following conditions:

Comes close to your “Wish List.” The “dream home” exists only in our minds. Smart first time buyers who search for a home by first creating a comprehensive wish list—and writing it down for constant review as you house hunt—can make a prompt decision on any given home. When a home hits most of the points on your list, it’s time to make an Offer.

Matches Your Affordability Level. I assume you have been properly prequalified by an experienced mortgage loan originator. By knowing your “numbers” you’ll know when a given home matches your level of affordability for a monthly payment. It’s all about monthly payment. When a home matches what you can afford monthly, it’s time to make an Offer.

Make an Offer NOW; don’t go home and think about it!

Too many first time Buyers do that and they wind up losing

out on a great house because of their tardiness.

Here in New York you are not committed to the transaction at the Offer-stage; not until you sign a contract of sale with your Attorney (usually about a week later) are you prevented from changing your mind. If you’re not in New York, check with your local Realtors and/or real estate Attorneys to see what you’re committed to at the point you make an Offer.

I welcome Comments for all my blog entries but they must be approved.

I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve.

Thanks for reading tcurranmortgage.com.

Hope that helps!

Baby It’s COLD Outside: Rent Vs. Own

The Arctic Blast has hit New York; temperatures outside hover around 9 Degrees. It’s days like these that give rise to the common complaint, “My Landlord doesn’t provide enough heat.” If you’re one of the people who doesn’t have that complaint, bully for you! But if you’d like better control over the temperature of your residence the best way to do it is to own a home.

Then, when you’ve turned the Thermostat down to 68 Degrees you have only yourself to blame!

Better yet, maybe you want to go “all the way” with your comfort inside your home. Radiant Heating, Central Heating/Air Conditioning, High Quality Insulated windows and energy-efficient insulation are some of the choices you have to make your home as comfortable as you want it. Yes, these things cost money, but you’ll have your financial benefits of homeownership to help you pay for it. Better yet, since you’ve taken out a mortgage with a monthly payment you can afford, you can budget to save for any or all of these improvements.

Then on a COLD day like today, you can live comfortably and never have a complaint about your Landlord.

I’m just sayin’…

I welcome Comments for all my blog entries but they must be approved.

Thanks for reading tcurranmortgage.com.

Hope that helps!

Minimum Down Payments for Different Loan Programs

As of this writing, here are the minimum Down Payment requirements for mortgage lending here in the NY Metro Area for the basic loan programs.

As of this writing, here are the minimum Down Payment requirements for mortgage lending here in the

NY Metro Area for the basic loan programs.

Veterans Administration Loans: If you are a Veteran of the Armed Forces and you qualify for VA Guaranteed mortgage financing, then eligible Veterans are permitted to financing up to 100% of the purchase price of the home. That means no down payment.
http://www.trulia.com/blog/tcurranmortgage/2011/10/va_mortga…

FHA 3.5% Down Payment: For other HomeBuyers, Non-Veterans, the program in the NY Metro region for qualified Homebuyers with the lowest down payment requirement currently is the FHA or Federal Housing Administration. The FHA Insures mortgages made by banks and Mortgage Bankers and allows for a down payment of only 3.5%. http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home

The FHA is used most often by First Time HomeBuyers, but you don’t have to be a First Timer to use the FHA program.

The FHA will provide insurance for mortgage loans on 1-4 Family Homes, and FHA Approved Condominiums. FHA Insured financing is not available for Co-Op apartment purchases in New York.

Conventional (FannieMae/FreddieMac):

After FHA, Conventional financing through either FannieMae or FreddieMac allows for a minimum down payment of 5%. The Lender will need to obtain approval from a Private Mortgage Insurance company (PMI) to complete the loan approval.

For Co-Op Apartment purchases, minimum down payment under Conventional guidelines is 10% down payment with PMI. The actual Cooperative may have different down payment requirements regardless of the financing you can obtain; best to check with your Realtor for the qualifying basics of any specific Cooperative.

I welcome Comments for all my blog entries. I will be happy to review and approve all legitimate comments provided by readers of tcurranmortgage.com. I do not permit unfettered access to comments for obvious reasons: mortgage spammers and their ilk. If you wish to Comment on any entry, please do so and I will quickly review and approve.

Thanks for reading tcurranmortgage.com.

Hope that helps!

Trevor Curran NMLS #40140

Appraisal came in SHORT. WHAT NOW?

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day. Those motivations drive everyone to find a solution and get the deal closed. Or not.

Wow, 27+ years as a Mortgage Banker! I have seen the occasional short appraisal! I started in November 1989 because I wanted to become a Homeowner so I chose a path which would get me there: Mortgage Professional.

Times were tough back in that market. Interest rates were high and property values had dropped dramatically. The employment picture for many Americans wasn’t very promising. There were a lot of foreclosures and homeowners had a hard time refinancing their mortgages due to lost equity. Sounds very similar to our recent post-meltdown market with the exception of the interest rates (11% in 1989!!!).

I received a valuable part of my education early on in my career as I dealt with purchase transactions where the appraisal came in for less than the purchase price. Buyers, Sellers and their respective Realtors are all “IN IT TO WIN IT” and make the deal happen.

I carry that education with me to this day when my HomeBuyer clients ask me at application time, “What happens if the appraisal comes in for less than the Purchase Price?” I know many HomeBuyers may think it’s a NO-BRAINER: the Seller will automatically reduce the price. But that is NOT the case right out of the gate. Here’s what I learned all those years ago about appraisals that come in short:

When the bank appraisal comes in for less than the contract price

there are FOUR ways to proceed with the transaction.

The Purchaser comes up with the difference in cash. If the appraisal is less than the Purchase price, the Seller basically assumes the Purchaser wishes to buy the house according to the terms of the contract, including the agreed upon Purchase Price. Therefore, the Seller assumes the Purchaser will come up with the cash necessary to complete the transaction.
The Purchaser and the Seller meet in the middle. The Purchaser comes up with some cash but the Seller also agrees to reduce the price enough to meet the Purchaser somewhere “in the middle.” Both sides want to complete the transaction and so they work it out. This is compromise at its best.
The Seller reduces the Purchase Price to equal the Appraised value. This is the least likely scenario, but not an impossible one. Sellers often want to complete the purchase transaction on the original terms of the contract, including the price. But a determined Purchaser working with a great Realtor, by digging in and working hard to negotiate can often make it happen.
Nothing happens and the deal is cancelled. The Purchaser either cannot or will not come up with the extra cash and the Seller refuses to reduce the price completely or even a little bit to meet the Purchaser. In this case the transaction is cancelled, the Down Payment is returned, and everyone goes home unhappy. The Purchaser has to begin all over again and the Seller has to put the house on the market and try to find a new Purchaser.

In the end, the motivations of all parties to make the deal happen and close the transaction rule the day. Those motivations drive everyone to find a solution and get the deal closed. Or not.

Do you have questions? Click on ASK TREVOR and I’ll respond to any and all inquiries, even if you’re not buying a home in New York State.

Check out my Trulia profile HERE

Check out my Zillow profile HERE

Find me on TWITTER: @tcurranmortgage

Happy House Hunting!

FHA: Me and my Pal, Phil Faranda, are True Believers

I’m a true believer, always have been, always will be, in FHA Loans.

If you’ve browsed around tcurranmortgage.com you’ve probably noticed I love working with First Time Buyers and I love FHA Insured Mortgage Loans. I think of FHA Loans as the Original First Time Buyer’s Mortgage Program. The FHA was created in 1934 to help a nation of renters become a nation of homeowners. The FHA was created during the Great Depression by a government intent on improving the economy; homeownership is the gateway to a better financial future for American families. The FHA helped families move in, and move up.

Since the loans were insured by Uncle Sam, he wrote the rules for approving the loans (Kinda like the Colonel’s Secret Recipe, when FannieMae and FreddieMac created first time buyer loan programs, they modeled them on the FHA). And those rules were Oh SO MUCH easier to follow for first time buyers. The only mortgage alternatives at the time were small savings banks lending depositors’ money. Small banks loaned depositors’ money using Darwin’s Theory: the survival of the fittest. Since the small local bank only had limited funds to draw on for lending, they would lend only to the very best qualified applicants. FHA filled a gaping void in the lending universe during and long after the Great Depression.

The first mortgage loan I wrote as a Mortgage Banker back in 1989 was an FHA loan. I continued through the 1990’s to help families achieve their goals of homeownership using FHA loan programs. Then came The Boom. FHA faded away. But not for long!

I was jazzed that FHA loans made a much-needed comeback in 2007-2008 to help our industry recover from the Sub-Prime Meltdown.

I’m a true believer, always have been, always will be, in FHA Loans.

My pal Phil Faranda is, too. Here’s his excellent post about FHA Loans.

Thanks for reading tcurranmortgage.com.

Hope that helps!

Your Credit Score is Less than 620 And You Want To Buy A Home

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

The state of the economy isn’t helping. It’s not enough that housing sales are down, property values are declining and mortgage lending is tougher than it’s ever been. With the state of this economy, more and more folks face daily challenges due to job loss or reduced incomes. Their credit is suffering as a result. Yet, these same folks still harbor the dream of owning a home.

We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500’s. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here’s some simple advice for you.

It is unlikely you could be approved for mortgage financing with that credit score at this time.

Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.

First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.

Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you’ll need to establish several in order to create a viable credit history.

I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You’ll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website.

Beware of anyone offering to “repair” your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE.

The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.

The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Thanks for reading tcurranmortgage.com. Hope that helps!

Speak to your Tax Professional NOW

Speaking to your tax professional twice more after filing your income taxes helps you manage your money more efficiently.

I always recommend to my clients that they undertake two important tasks when it comes to income taxes and homeownership.

First:

Find an experienced and competent

tax professional and create a long-term relationship.

You’ll thank me for this advice years from now. There’s nothing better than knowing you can rely on the advice of someone who “has your back” with all things tax-related. You can find local tax providers through the IRS website, www.irs.gov using this link: HERE

Second:

Once you’ve created this superb new professional relationship

you should then set out to speak to your

tax professional THREE times annually.

One conversation obviously takes place during tax time. Sitting down with your tax professional shouldn’t only be about getting your income tax returns done. You should also be discussing your financial plans for your future and your current financial standing. A great tax pro can use that conversation to guide you both during the tax filing process and also throughout the year when you speak to your tax pro TWICE MORE.

The next TWO times you speak with your tax professional should be in June (around mid-way through the year) and again in September-October. These chats don’t need to be lengthy—fifteen to twenty minutes probably covers your current financial status. You’ll want to review your Year-To-Date income and income tax withholdings on your paystubs, especially if you have modified your withholding numbers to maximize your take home pay. More about that HERE and HERE.

Speaking to your tax professional twice more after filing your income taxes helps you manage your money more efficiently, IMHO. You’ll avoid any nasty surprises with the IRS (you never want to find yourself owing money at tax time!) and you’ll find yourself with more cash in hand throughout the year.

That all having been said: Speak to your Tax Professional NOW.

Thanks for reading tcurranmortgage.com. Hope that helps!