5 Mortgage Myths, by Trulia.com

Valuable Information brought to you by Trulia.com

 

 

In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction.  For buyers, misinformation can be the difference between qualifying for a home loan or not. Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

 

1.       Myth: Buyers with bad credit can’t qualify for home loans. Obviously, mortgage guidelines have tightened up, big time, since the housing bubble burst, and they seem likely to tighten even further over the long-term. But just this moment, they have relaxed a bit.  In the last couple of weeks, two of the nation’s largest lenders of FHA loans announced that they’ve dropped the minimum FICO score guideline from 620 (which allows for some credit imperfections) to 580, which is actually a fairly low score.

 

At a FICO score of 620, buyers can qualify for FHA loans at many lenders with only 3.5 percent down. With a score of 580, the lenders are looking for more like 5 to 10 percent down – they want to see you put more of your own skin in the game, and the higher down payment lowers the risk that you’ll default.  However, if your credit has taken a recessionary hit, like that of so many Americans, this might create a glimmer of hope that you’ll be able to take advantage of low prices and interest rates without needing years of credit repair.

 

2.     Myth: The Mortgage Interest Deduction isn’t long for this world.  Homeowners saved over $85 billion in 2008 by deducting their mortgage interest on their income tax returns. A few months ago, the National Commission on Fiscal Responsibility and Reform caused a massive wave of fear to ripple throughout the world of real estate consumers and professionals when they recommended Mortgage Interest Deduction (MID) reform, which would dramatically reduce the size of the deduction.

 

Fact is, the Commission made a sweeping set of deficit-busting recommendations to Congress, a few of which are likely to be adopted.  Fortunately for buyers and sellers, MID reform is not one of them.  Very powerful industry groups and economists have been working with Congress to plead the case that MID reform any time in the near future would only handicap the housing recovery.  Congress-folk aren’t interested in stopping the stabilization of the real estate market.  As such, the MID is nearly universally thought of as safe – even by those who disagree that it should be.

 

3.       Myth:  It’s just a matter of time before loan guidelines loosen up.  The US Treasury Department recently recommended the elimination of mortgage industry giants Fannie Mae and Freddie Mac. I won’t get into the eye-glazing details of it here, but the long and the short is that (a) this is highly likely to happen, and (b) it will make mortgage loans much harder and costlier to get, for both buyers and homeowners.   It’s possible that loans are as easy to get as they’re going to get.  So don’t expect that if you hold out, zero-down mortgages will come back into vogue anytime soon. Fortunately, Fannie and Freddie aren’t likely to disappear for another 5-7 years, so you have a little time to pull your down payment and credit together. If you want to get into the market, the time to get yourself ready is now!

 

4.       Myth: If you don’t have equity, you can’t refi. Much ado is being made about how stuck so many people are in their bad loans, because they don’t have the equity to refinance their way out of them.  If you’re severely upside down (meaning you own much, much more than your home is worth), stuck may be the situation. But there are actually a couple of ways homeowners can refi their underwater home loans.  If your loan is held by Fannie or Freddie (which you can find out, here), they will actually refinance it up to 125% of its current value, assuming you otherwise qualify for the loan.  That means, if your home is worth $100,000, you could refinance a loan up to $125,000, despite the fact that your home can’t secure the full amount of the loan.

 

If your loan is not owned by Fannie or Freddie, you might be a candidate for the FHA “Short Refi” program. While most mortgage workout plans are only available to people who are behind on their loans, the Short Refi program is only available to homeowners who are current on their mortgages and need to refinance up to 115 percent of their homes’ value.  So, if you owe $250,000 on your home, you can refinance via an FHA Short Refi even if your home’s value is as low as $217,000. If you think you’re a good candidate for a short refi, contact your mortgage broker, stat – there are some in Congress who think that this program is so underutilized (only 245 applications have been submitted since it rolled out in September – no typo!) that its funding should be diverted to other needy programs.

 

5.       Myth:  If you’ve lost your job and can’t make your mortgage payment, you might as well mail your keys in.  Until recently, this was essentially true – virtually every loan modification and refinancing opportunity required that your economic hardship be over before you could qualify. And documenting income has always been high on the requirements checklist. But there are some new funds available in the states with the hardest hit housing and job markets, which have been designated specifically for out-of-work homeowners.

 

The US Treasury Department’s Hardest Hit Fund allocated $7.6 billion to the states listed below – all of which are now using some portion of these funds to offer up to $3,000 per month for up to 36 months in mortgage payment assistance to help unemployed homeowners avoid foreclosure.  Contact the state agency listed below if you need this sort of help:

 

 

•Alabama: http://www.hardesthitalabama.com/

•Arizona: https://www.savemyhomeaz.gov/

•California: https://www.keepyourhomecalifornia.org/

•Florida: https://www.flhardesthithelp.org/

•Georgia: http://www.dca.state.ga.us/housing/homeownership/programs/hardesthitfund.asp

•Illinois:http://www.ihda.org/

•Indiana: http://www.877gethope.org/

•Kentucky: http://www.kyhousing.org/

•Michigan: http://www.michigan.gov/mshda/buyers/save_the_dream/helping+hardest+hit+homeo…

•Mississippi: http://www.mshomecorp.com/firstpage.htm

•Nevada: http://www.nahac.org/

•New Jersey: http://www.state.nj.us/dca/hmfa/home/foreclosure/homekeepers.html

•North Carolina: http://www.ncforeclosureprevention.gov/

•Ohio: http://www.savethedream.ohio.gov/

•Oregon: http://www.oregonhomeownerhelp.org/

•Rhode Island: http://www.hhfri.org/

•South Carolina: http://www.scmortgagehelp.com/

•Tennessee: http://www.thda.org/

•Washington D.C.: http://www.dchfa.org/

 

 

Bill Nickerson

Vice President

Mortgage Network

978-264-4803 o

978-268-5023 f

NMLS# 4194

The Final Walk-Through

I am not a real estate broker but I have been around this business long enough to know, the last thing you do prior to a closing is the Walk-Through.  This typically takes place the day before or the morning of the Closing.  To ensure that the home is presentable, broom clean and that no damage has been done to the home by the movers.  In most cases this can take anywhere to 15 minutes to an Hour, depending upon how detailed you want to be.  When spending this amount of money, take all the time you need!!

We have all heard stories of the new home not being “broom clean”, food left behind in the refrigerator or even a stack of firewood that was not removed.  With emotions running at high alert during the final stages of the buying process, the last thing the buyer wants or expects is to find problems during the Walk-Through. To a new homeowner, they do expect everything to be perfect, even if the home is 50 plus years old.

Well…today a new one.  On this “Royal” day, a very good and thorough Agent did the walk-through with his clients and proceeded to flush all the toilets one by one.  Yes, you guessed it.  In the process, the main sewer pipe in the basement let go.   YUP, it let go and it let go of everything inside.  With emotions already running high, you can imagine what the buyers were thinking and their reaction to the events that just took place. 

Many years ago an agent told me the Walk-Through should almost be like a mini home inspection.  Turn on everything in the home…crank up the heat, run the water, dishwasher, and…flush all the toilets!  Luckily all will end well.  The selling agent has informed the buyers that this will be resolved today which is a huge relief for everyone involved in the transaction.  So the moral of the story, don’t let this “Royal” flush cause problems for your next closing.  Make a checklist of to do’s for your next walk-through.

 

Do you have a standard check list of things you do

when performing a Walk-Through?

 

 

Please share your stories with us ….the Good, the Bad and the Ugly.

 

 

 

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