Real Estate Information Archive

Blog

Displaying blog entries 1-10 of 16

Financing Alternatives If You Have Been Denied

by Samia S. Morgan

It is happening more and more these days to potential home buyers; they find the perfect home at an amazing price but then are turned away because they were not approved for a mortgage loan. The real estate crisis has forced lenders to reevaluate their lending procedures and many guidelines are tighter than ever. It is not just first time home buyers either, even those buyers with good credit are being turned down for a mortgage.  

Don't be discouraged however, you may not have to walk away from owning your own home just because you were not qualified by a mortgage lender. Below are some alternative options that some home buyers are seeking to traditional mortgages. Of course everyone has a different situation but do some research, one of these may work out for you!

 Here are a few ideas:

  • Borrow From Life Insurance: You may have a whole life or other insurance policy that increases in value over time. If you borrow against that cash value, you don’t have to go through standard loan qualification.  Be sure to check with your insurance company about the risks involved
  • Owner/Seller Financing: If the seller is an investor, or if the seller owns the property free and clear, they may offer owner or seller financing options to help move the property. You will still be responsible for principal, interest and scheduled payments through a promissory note, but you probably won’t go through the rigorous qualification process that a bank requires. Typically owner or seller financing also saves mortgage origination fees and other fees tacked on by most lenders.
  • Borrow From An IRA: If you have a self-directed IRA, then you know that you can use the IRA to invest in a number of assets, including mortgages. Although you can’t use your own IRA to buy your personal home, a family member or other investor can use a self-directed IRA as the investment vehicle for your property. Private investors often step in to help with acquisition loans, although you can expect to pay a higher rate for the initial loan.
  • Lease/Purchase Option: Many investment owners are willing to offer a lease/purchase option or rent to own agreement. You are able to rent the property for a specific term, usually with higher payments than the market rate; and your rents go toward the purchase or down payment of the property.

As with any home purchase, do your homework if you are looking at alternative financing methods. Make sure the title to the property is clear and that you meet all the state lending requirements for your financing. A realtor or title company should be able to help you through the process. You also want to be sure that you are able to afford the monthly payment or repayment plan and that the investment in the home you want is sound.

 

/kh

Do You Know Your Debt To Income Ratio?

by Samia S. Morgan

If you are obtaining financing to purchase a new home, it is important to understand that your lender will look at what is called a debt-to-income ratio. Of course your lender will look at various different aspects of your financial situation but this is an important aspect and the loan could be denied if the ratio is too high. Below is more information on why is it important to you and how it effects your financing.

What the debt-to-income ratio means is that lenders will do a comparison of the money you earn to the money you owe. It includes credit card debt, existing mortgages, auto loans, and any other personal debt.

Your mortgage lender will look at your Debt-To-Income (DTI) to evaluate your ability to afford your new mortgage. You should have a good idea of what your DTI ratio is before you approach a lender or consider buying a new home.

You ultimately want to achieve a low DTI ratio. A high number means that you have less disposable income and less ability to maintain the home once you purchase it. With foreclosures at an all time high, lenders are not willing to assume any additional risk in lending.

Most lenders seek DTI ratios in the 20-36% range or lower, with no more than 28% of debt dedicated to the mortgage itself. While some lenders will consider higher ratios, DTIs in the upper 30% range are considered high risk.

There are several different calculators available online to help you determine your ratio, and you can always check with your financial institution for guidance on determining your DTI ratio.

Here’s a simple formula:

  1. Add all your monthly payments (mortgage or rent, car, credit cards, any other debt payments)
  2. Add your gross income (before taxes), bonuses, alimony, or any other outside income and divide by 12
  3. Then divide the total number in (1) by the final number in (2)
  4. The result is your DTI ratio


Whether you are ready to buy a new home or are just interested in your financial health, it’s a good idea to know your DTI and understand the steps to lower your ratio and become as close to debt-free as you can.

/kh

Mortgage Rates Remain At Record Lows

by Samia S. Morgan

Even with a sluggish real estate market, there is good news for homebuyers. Mortgage rates are and have remained steady and are still at a record low.

Qualified buyers can find rates as low as 4.375% for a 30-year fixed FHA loan. 15-year fixed FHA loans are being obtained at 4.5% with zero origination fee. 5/1 ARM FHA rates are at 3.5%

On a daily basis, FreeRateUpdate.com researches over 2 dozen wholesale lenders' rate sheets for brokers. They locate the most accurate and lowest rates available to those borrowers who are qualified.

The recent drop in stocks have caused the mortgage-backed securities prices to increase which push the mortgage rates down. Most of this is due to investors moving towards safer investments such as bonds.

If you are doing your research on the best rates available,  check out Google's mortgage results to compare available rates from various lenders. 

/kh

Eventhough the official start of Summer is a few weeks away, homeowners all over the Bay area are already in the midst of home projects and lawn care. Below are some tips to help you get your home in tip top summer shape.

  1. Lawn tools and care – make sure your lawnmower and other lawn and garden tools are in good working order. Its a good idea to have a tune up and your blade sharpened. Adding fresh oil and fuel is also a good idea. Consider colored flowers and plants that will provide color in small spaces or on patios if you have limited garden space.
  2. Clean up patio furniture and your outdoor grill, wash your windows and tidy up walkways. Now is the perfect time to create an outdoor living area for your family and friends. String lights or simple lanterns can also be affordable ways to add nice interest to your porch or patio. If you have a pool, make sure your filter systems and pumps are clean and ready to operate at full steam.
  3. Treat for pests – find a reputable pest control company to do a general treatment for summertime bugs like spiders and mosquitoes; invest in citronella candles and family friendly bug spray.
  4. Have your AC system serviced – it’s a good idea to have a semi-annual checkup before the real heat of summer puts pressure on your HVAC system.
  5. Make sure your home is energy efficient – check weather stripping and window seals and make sure that none of that cool air inside is escaping outside; keep your temperatures moderate in the house so that your systems don’t go into overdrive during the hottest part of the day.

Enjoy the treats of long summer days – both indoor and outdoor comforts and pleasures. Summer always goes fast!

 

/kh

Dealing With Loan Denials

by Samia S. Morgan

Obtaining financing for a new home can be a challenge in this difficult economy. Many mortgage lenders have tightened their requirements. However, it is important for homebuyers to realize that it isn't always the lenders fault. Of course they would like potential customers to assume that they will be approved but the loan industry is a very risky one right now and they have to protect their assets. 

Many potential homebuyers are finding that their application has been denied, so if you have been denied recently or in the past for a loan, it's time to take control of the situation. Educate yourself, ask questions and do your research to help change that NO answer to a YES answer! Here, to help you out are some suggestions.

  • Consider a co-signer if your income simply is not high enough to qualify for the actual loan. The co-signer's income can possibly be considered as an amount towards your loan regardless if the person is living with you or helping you pay the actual bill. In many cases, the cosigner might also be able to compensate for your low credit. It is important however to understand that there are risks for your cosigner and if you default on your mortgage, the lender can actually in turn go after your cosigner for the full amount!
  • Wait it out.  Sometimes the best advice you can get, especially if the conditions in the housing market is slow or the economy is bad, is to simply wait. Oftentimes when conditions improve in the economy, the lenders will be more willing to let you "borrow" the money for your loan. While you are waiting, you can take this time to work on your credit score. While you are waiting, home prices could also drop!
  • Consider a less expensive property. We all want what we want, but you might have a better chance of being approved if you switch to a less expensive option. For example, if you wanted a house, but you cannot wait and you cannot qualify for the loan, you might consider switching to a smaller home or to a town home instead. Later on down the line when your financial situation improves, then you can trade up the property and move to the location and home you really want to.
  • Apply with a different lender. The world is full of lenders, if you don't like what one says or you get denied - try someone else! However, if every single lender you go to denies you, you should become aware that it is for a reason - in fact, if they all list the same reason then you will know what you need to fix.  Use common sense and stay away from predatory lenders. We have heard some pretty scary stories about these places - so just don't do it. You could literally be signing your life away.

Keep in mind that if you are denied, keep trying and work on your credit and then in a few months try again! With a little time, patience and understanding, you could be able to turn the situation around to your favor!

 /kh

Deciding Between Two Houses?

by Samia S. Morgan

Shopping for a home can be an exciting time, but when house hunting you may find two houses in which you cannot decide which one is the right one. It might be that you have found what seems like two perfect homes and deciding between the two can be a difficult decision.

Purchasing a home is a major decision and shouldn't be taken lightly, so it is a good idea to approach it rationally and not be guided by emotion, which can be easier said that done.

Making a decision may at times be necessary if the seller has received multiple offers. Start the decision process by making a list of your needs as well as the pros and cons of each house.  Some things you'll want to compare include:

•Which neighborhood offers the most benefits? If the two homes you are looking at are in different neighborhoods, evaluate the pros and cons. Perhaps you have children and need to be close to schools or parks or even other families with children. Also consider the proximity to shopping, restaurants as well as your work commute, church, and other services? Are the streets maintained? Do homeowners landscape and maintain their homes nicely? How long will  Don't forget to inspect the other homes in the area, are they well maintained?

•Do your research on the crime statistics in the area. You can get this information from the local police or sheriff department.  You might find theft or vandalism to be more prevalent in one area than another.

•If you have children who are in school, having a good school system is an important aspect to consider in your decision. You can find school ratings, reviews and test scores at Greatschools.com to help you make the decision that is right for you.

•In your list of pros and cons be sure to identify the specifics of the house and your current and future needs. Does the home have enough room? Is the layout what you want?st. Then, rate how each house measures up to each need on your list.

If you are still having difficulty deciding, it is a good idea to visit  each home at least two more times, at different times of the day to get a feeling for how the house and neighborhood look and feel. It can be a difficult decision but you want to make sure you are comfortable as it is one of the largest decisions you will make.

 

/kh

Home Equity Loans And Taxes

by Samia S. Morgan

Home equity loans are a great way to access the equity in your home and provide you with extra funds to pay off debt, remodel or even for a vacation. Most homeowners don't know that there are also some tax benefits in doing so as well.

 There are two basic types of home equity loans.  One type is a traditional loan where you borrow the whole amount of the loan, then pay it back with specified monthly payments over a specified term.  The second type is a Home Equity Line of Credit (HELOC) where you obtain a fixed line of credit based on the equity of your house.   Typically with this type of loan you only pay interest on the amount that you borrow, and your monthly payments may vary also.

The interest is deducible up to the purchase price of the house plus any improvements.  Many people mistakenly think that all real estate related interest is deductible.  Several years ago the held true but tax reform has since been passed. However, for most people the tax deductions are still substantial, but you may want to consult a tax professional to determine how much you can deduct in your specific case.

However, even if the interest is not deductible, the savings associated with the lower interest rates charged on a home equity loan, will still be beneficial to pay off other higher interest credit cards or other loans.

It is important however to do the math and be responsible when considering these types of loans. Many homeowners found themselves in trouble when they borrowed against the equity in their home and then when housing values declined, they owed more than the house was worth.

Understanding Mortgage Points

by Samia S. Morgan

When researching mortgage financing, potential homebuyers will often receive quotes from lenders that include both loan rates and "points." Many people are unaware as to exactly what is a point?

A point is a fee equal to 1 percent of the loan amount. For example, A 30-year, $200,000 mortgage might have a rate of 6 percent, but come with a charge of 1 point, or $2,000. A lender can charge 1, 2 or more points. There are two kinds of points: discount points and origination points.

 •Discount points:These types of points are really prepaid interest on the mortgage loan. Because, the more points you pay, the lower the interest rate on the loan and vice versa. Borrowers typically can pay anywhere from zero to 3 or 4 points, depending on how much they want to lower their rates. The advantage to this type of point is that it is tax-deductible.
 
 •Origination fee: This is charged by the lender to cover the costs of making the loan. The origination fee is deductible if it was used to obtain the mortgage and not to pay other closing costs. The
IRS specifically states that if the fee is for items that would normally be itemized on a settlement statement, such as notary fees, preparation costs, and inspection fees, it is not deductible.
 

There are many different factors that will effect whether or not you pay points as well as how many. The amount of money you have to put down at closing as well as how long you plan on staying in your house can be a factor. If you plan to stay in your home for a while, it may be worth reducing the interest rate by paying points. Be sure to have your lender carefully explain these fees if you have any questions.

 

Local Earth Day Events

by Samia S. Morgan

On April 22nd we celebrate Earth Day, which is a day designed to inspire awareness and appreciation for the Earth's environment. This year's celebrations mark the 40th anniversary of this day of observance of the need to protect the earth. The San Francisco area offers many different events to celebrate Earth Day. Below are some of the exciting events planned in the area!

   The Marine Science Institute's "Earth Day on the Bay!"This event is on Saturday, April 17, 2010 from 8 am - 5 pm. This all day event is filled with family-friendly events geared towards providing fun, memorable, and meaningful experiences to bond you with San Francisco Bay, and the planet. Last year was was a tremendous success, and this year promises to be their biggest and best yet.  If you like music, mud and sea creatures, you are bound to have a great time! Create ocean crafts, enjoy our special presentations, or head out on the Bay on one of our four trips aboard our Research Vessel, the Robert G. Brownlee!

SCA San Francisco Earth Day Project
On April 24, 2010 9:00am - 12:00pm in San Francisco, CA. Join the Student Conservation Association (SCA) and the Golden Gate Audubon Society for day of fun projects in San Francisco. On Saturday, April 24, we will be joining Golden Gate Audubon Society at Harding Park in San Francisco. Get your hands dirty removing non-native invasive plants, and building trail to improve your city parks. Meet SCA members and alumni, SCA supporters, community members and SCA staff. of Where: Harding Park, Sunset & Lake Merced Blvd, San Francisco, CA 94132. Register for the San Francisco Earth Day Service Event at
http://www.thesca.org/events/sca-san-francisco-earth-day.

Green Festival Event
On April 10th and 11th , over 225 visionary Speakers and Artists to motivate you, more hands-on workshops to keep you participating in the process, and more planet-friendly choices to help you activate your goals every day – all in a more intimate setting! Join Mayor Gavin Newsom to learn more about the Bay Area's new clean energy economy. Visit the Fair Trade Pavilion to learn how fair-trading your home, workplace and community with foods, home furnishings and textiles can make a world of difference. At the Green Design Pavilion, explore sustainable innovations within your budget that will help you make the most of your home and work environments. Don’t miss the Eco Fashion Show presented by Hi-Def Creations, Inc.—a showcase of the Bay Area’s eco-conscious fashion designers, make-up artists and hairstylists. Visit the Green Kids' Zone throughout the weekend to find activities and storytelling for the whole family.

 

What To Look For When Buying A Home

by Samia S. Morgan

When looking for a new home, you will find that it can be a fun and excting process. It can however, be easy to overlook certain negative aspects and make decisions that may be costly down the road. While many first time homebuyers may overlook potential problems, it can happen to even the most veterarn homebuyer. To help you look for potential problems, there is a list below that can help guide you through the process when you begin your home search.

Be sure to inspect the neighborhood closely. Finding a great home that is located in a neighborhood that doesn't suit your needs or a community that is decline can be a bad decision.  Before viewing any homes for sale, it is a good idea to do some research and review the neighborhoods in your area. One great  online databases is Move.com’s City Profile Report, which gives you a detailed look at specific neighborhoods using demographics, finances and economics to help determine quality of life.

Is The Price Right? Is This Really A Good Deal? If you have found a home you really love but might need some work, it is vital to consider a few things. It is easy to fall in love with a home that needs some work and talk yourself into the fact that you can fix it up. Many times these projects can be very costly and time consuming, so it is important to ask yourself questions such as: 'Do you have the money to fix this up? and "Do you have the time to invest?' It is also important to ask your self the question as to if it will be worth the cost-also if you don't have the money to invest you will be loosing value.

Don't Overlook The Additional Expenses. The mortgage is not the only expense associated with the purchase of a home. Other costs are typically associated with the purchase of a property that may not be considered.

  • Homeowner Assoication Fees: If you move into a development with an HOA, you will be required to make either a yearly or monthly fee. Keep in mind that HOA fees will typically raise each year and there are fees that are imposed for not following regulations. Be sure to read the fine print.
  • Real Estate Taxes: Home value and location will have an effect on the amount you will be required to pay each year. Be sure to consider that property taxes can increase dramatically because of new levies or even reappraisals of your property.
  • Utilities. Be sure to ask what the typical monthly costs are for gas, electric, water etc. If you are currently renting, the increase in utility costs from an apartment to a home can be shocking. Do your research so you are not surprised.

Finding a home you love and that you can afford is important. If you are a first time homebuyer it is important to do your research so you can make an informed decision and be happy with your home purchase years down the road!

Displaying blog entries 1-10 of 16

Syndication

Categories

Archives

Contact Information

Photo of Samia S. Morgan, Inc. Real Estate
Samia S. Morgan, Inc.
dba Samia Realty Group
BRE# 00967165
San Mateo CA 94403
650-678-3633