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5 Tips for Homebuyers Seeking a Mortgage

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Here’s a warning for potential borrowers: Nervous lenders have tough new rules and are paperwork crazy.

"Borrowers are going to have to prove they are the borrower they say they are," says Keith Gumbinger, vice president of HSH Associates, a mortgage-industry publisher in Pompton Plains, N.J.

Gumbinger says homebuyers should consider these things before they apply for a loan.

1. Down payments are critical. Borrowers should expect to put down at least 10 percent for a “conforming loan” – a mortgage that Fannie Mae and Freddie Mac will purchase.

2. Credit scores count. A 720 on the 850-point FICO rating scale will get a borrower access to the best rates. Rich Bira, branch manager of FCM Direct Lender in Chicago, says: "A score between 720 and 739 gets 0.125 percent added to the rate, a score between 700 and 719 gets 0.375 percent added to the rate, and a score between 680 and 699 gets 0.5 percent added to the rate.”

3. Consider VA and FHA Mortgages. Borrowers without down payments or with less than stellar credit scores should consider these government-insured loans offered through the Federal Housing Administration of the Veterans Administration.

4. Unearth the records. Before applying, borrowers should organize tax, banking and other records that prove income, savings and debts. They should also expect to be patient about what may seem to be endless requests for information.

5. Get rid of debts. Limiting debts, including what borrowers expect to pay for the mortgage, to less than 43 percent of gross income is important.

 

Source: NAR

Rick Santelli's Rant Of The Year On Obama's Mortgage Plan

by Jorge Gonzalez, ABR, CRS, GRI

If you thought you were the only one frustrated by people benefiting from not taking personal responsibility for poor investment decisions and having responsible taxpayers bailing them out, check out Rick Santelli's rant on CNBC.  

 

The $790 billion stimulus package increases the home buyer tax credit to $8,000, from $7,500, and drops the repayment feature for buyers who hold on to their property for at least three years.

The NATIONAL ASSOCIATION OF REALTORS has sought removal of the repayment requirement because it discourages buyers from taking advantage of the tax credit. The three-year minimum holding period is a safeguard against speculators' use of the credit.

The legislation also extends the effective date of the credit to December 1 from June 30, and extends eligibility to borrowers who buy their home with the help of state or local financial assistance that comes from the proceeds of tax-exempt mortgage revenue bonds.

The credit remains open only to first-time buyers (those who haven't owned in at least three years) and some income eligibility restrictions apply, but those are unchanged from the existing program.

Other provisions reportedly in the bill that could help housing markets and communities include:

  • FHA and conforming loan limits. Specifics have not been released but reports indicate that the 2008 limits have been reinstated for 2009 except in those communities where the 2009 limits are higher. Additional increases in individual communities may also be available at the discretion of the secretary of the U.S. Department of Housing and Urban Development.
  • Foreclosure mitigation and neighborhood stabilization. Funding for states and localities to be used for neighborhood stabilization activities for the redevelopment of abandoned and foreclosed homes are authorized. Some news reports put the funding level at $2 billion.
  • Rental assistance. Up to $1.5 billion to provide short-term rental assistance and other aid for families during the economic crisis.
  • Transportation infrastructure. Up to $29 billion for highway construction projects, $8 billion for rail projects, and $5 billion to weatherize low-income homes.
  • Rural housing development. Increased funding for the Rural Housing Service direct and guaranteed loan programs.
  • Low-income housing grants. Allow states to trade in a portion of their 2009 low-income housing tax credits for Treasury grants to finance the construction or acquisition and rehabilitation of low-income housing, including those with or without tax credit allocations
  • Tax-exempt housing bonds. Tax-exempt interest earned on specified state and local bonds issued during 2009 and 2010 will not be subject to the Alternative Minimum Tax (AMT). In addition, financial institutions will have greater capacity to purchase tax-exempt state and local bonds
  • Energy efficient housing. Grants for energy retrofits for federally assisted housing (Section 8), funding for energy efficiency and conservation block grants to states, and Increases in the residential tax credit through 2010 for certain energy efficient upgrades. 

Source: NAR

The RE/MAX Times Online sat down with the RE/MAX International CEO Margaret Kelly (CRB) and President Vinnie Tracey (CRB) to learn their reasons for optimism in spite of negative reports and dismal statistics surrounding housing markets across the United States.

RE/MAX TIMES ONLINE: What is your assessment of the U.S. housing industry?

Kelly: We have to promote that it’s a great time to buy a home. Rates are low, and there is a large selection of homes for sale. The U.S. economy will not recover until the housing market recovers. I believe the new administration understands that and will work to get the housing industry moving forward with affordable mortgages and programs to keep families in their homes. And it’s most important that buyers and sellers use a Realtor. Consumers need the experience and professionalism of a real estate agent.

 
 

Tracey: Going into 2008, there were 1.38 million Realtors - an all-time high. The good thing is that we lost 140,000 Realtors, mostly the inexperienced and ineffective, throughout the year. With a compression in the industry to a projected 500,000 new home sales and 5 million resales in 2009, and more Realtors expected to leave the industry, there will be less competition.

RE/MAX TIMES ONLINE: What do you see for the coming year?

Kelly: We’ll never see prices or times like this again. You’ll see more first-timers and side-liners getting into the market. We have had cycles like this before, and we’ll come out of this one too. People are still buying and selling homes.

Tracey: Another 180,000-200,000 agents will leave, putting the Realtor population a little over 1 million. It’s a good thing, showing that people who are well educated and well prepared with great knowledge and wisdom find success, and they realize that people are still buying and selling. Momentum from Obama’s inauguration will start a shift to more positive messages from the press. I’ve always contended that every recession we’ve had, real estate led us out. Now we need the press to help us with positive headlines that can lead to more consumer confidence.

RE/MAX TIMES ONLINE: How is RE/MAX poised to succeed?

Kelly: There are a lot of businesses out there without the ability to sustain. We’re strong, we’re well run and we have a good history of production. People who didn’t run their businesses right are getting out, which means more business for RE/MAX. Franchise sales are great, which means even more for-sale signs and sold signs promoting our agents and the RE/MAX brand. And the addition of regions in more countries strengthens us all.

Tracey: Brokers are seeing a flight to quality. Quality agents look at the tools and competitive advantages at RE/MAX, and they start coming over. We have several advantages over the competition: RE/MAX University with ATOD, MTOD and professional designation courses right from the comfort of your office or home; leads with no referral fees from RE/MAX International, and the Design Center. You would pay a considerable amount for the same service elsewhere. The competition isn’t advertising as much, or in the same places. RE/MAX share of voice will continue to outpace the competition.

RE/MAX TIMES ONLINE: What should RE/MAX agents be focusing on this year?

Kelly: It’s important to remember that in a real estate climate like this, our agents can help families stay in their homes. The more homes we help families keep out of foreclosure, the easier it will be on people who have to move. RE/MAX agents should take this time to get advanced designations - take classes on how to handle REO and distressed properties. They should use the strength of the RE/MAX brand in all they do. There are opportunities in every market, and agents need to find those opportunities in their marketplace.

Tracey: The obvious negative in the market over the past three years is the increase in foreclosures and the shift to a supreme buyer’s market. But affordability is up dramatically from a year or two ago. Affordability in California, for instance, has jumped from 20 percent to 50 percent. Interest rates are down. Foreclosures are sad, but now that they’re in the inventory banks are more willing to negotiate short sales. They used to hold out for 80 percent to 90 percent of the homes’ value, but now they’re taking 50 percent to push the inventory.

7 Steps To A Greener Bathroom

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If your resolution for 2009 is to live a little greener, an easy place to start is in the bathroom. In a typical home, the bathroom is where we use the most water. So how do you make your bathroom green? Start conserving water by following these simple steps:

1. Check your toilets for leaks.  Put a few drops of food coloring in the toilet tank. If, without flushing, the coloring begins to appear in the bowl, you have a leak that may be wasting 100 gallons of water a day.

2. Install water-saving showerheads or flow restrictors

3. Take shorter showers.  Try to keep them under 5 minutes. You can also save water by turning off the water while soaping down.

4. Turn off the water while brushing your teeth and shaving.  Turning off the water can save 4 gallons per minute.

5. Stop using the toilet as a wastebasket.

6. Install inexpensive faucet aerators. By mixing air with the water, aerators reduce the amount of water that comes out of the faucet without reducing the pressure.

7. Install high-efficiency/ultra low-flow toilets.  Look for the WaterSense label.  If you live in Virginia Beach, take advantage of the Toilet Rebate Program and get $75 for each older toilet you switch out with an ultra low-flow model using no more than 1.6 gallons per flush.  For more info, call the Office of Permits & Inspections at 757-385-4211 or visit their website at VBgov.com/dpu and click on the link for "Water Conservation." 

While it may seem a bit overwhelming at first, don't get discouraged.  Start with one or two water saving practices at a time. As those become second nature, begin adding other techniques into your daily routine. By making a few small changes and breaking some bad habits, you can start saving the planet with every drop you save.  Find more water-saving tips at www.hrwet.org.


Source: Pipeline

Displaying blog entries 1-5 of 5

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