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Archive for the ‘Can You Afford That House?’ Category

Credit Score Requirements Ease for Some

By: Amanda Johnson

Tight lending guidelines have weighed on the U.S. housing market during its ongoing recovery. Most lending institutions during the past two years raised their credit score requirements to as high as 650, making it nearly impossible for many people to obtain a loan.

Wells Fargo made it a little easier for homebuyers this past year, when the lender lowered its credit score requirements on FHA mortgages.

“Under its new policy, Wells Fargo will accept borrowers with credit scores of 500 to 579 if those borrowers can make a down payment of at least 10%,” said Robert Lentini, a mortgage expert who blogs for the website thetruthaboutmortgage.com. “For borrowers with credit scores of 580 to 599, borrowers must put down 5%. Borrowers with credit scores of 600 or higher can make a 3.5% down payment.”

Quicken Loans, Inc. adapted similar policies— dropping to a minimum 580 FICO score. “There are folks who have steady incomes and a solid payment history but were temporarily affected by the economy or a life event in some way. These challenges can lower their credit score significantly,” said Quicken Loans Inc.’s Chief Economist Bob Walters in a company statement. “We believe that a credit score, on its own, is not the sole arbiter of a person’s credit worthiness. This change will open up credit to a significant group of people and allow them to again have access to purchase or refinance a home.”

Such developments have been welcome news to FHA Commissioner David Stevens, who earlier this year urged lenders to lower their minimum credit score requirements to help the real estate industry as a whole. Stevens said that stringent requirements have constrained home sales by as much as 20% over the past year.

Amanda Johnson can be reached at 573.449.6200. Prudential Vision Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

First Time Homebuyers- What You NEED To Know

While going from being a renter to a first-time homebuyer is a transformative experience, it also brings a whole new set of home maintenance responsibilities. With no more 1-800-Landlord number to call when things go wrong or need repair, you’re now fully in charge of maintaining this most important asset.

Just as the joys of home ownership appear in ways large and small, so do home maintenance needs and expenses. Here are tips to help first-time buyers stay on top of home maintenance tasks.

Gear up for every need: Home maintenance is a year-round job, so invest in the tools you’ll need to tackle typical projects.

Avoid problems with snow days and other seasonal challenges by gearing up with a set of basic hand tools and an arsenal of lawn and garden implements. And while you’re at it, invest in a storage system for home maintenance equipment that keeps everything neat and within reach, whether in your garage or a stand-alone tool shed.

Get to know the pros: First-time buyers can also be prepared by assembling your very own “home team” of contractors and service people well before you ever need them. Find local home maintenance specialists through the recommendations of family and friends, and by connecting with referral services.  The REALTOR who helped you find your new home can also put you in touch with pros whose work quality and ethics can be trusted.

Understand your home’s operating systems: Understanding the basics of your home’s mechanical systems is a must for first-time buyers, even if you call a pro for major home maintenance and repair issues. Know where your main water line is and how to shut it off in an emergency. Get acquainted with the fuse or breaker box, and label essential and non-essential systems for quick reference and energy-saving shutdowns when you’re away for extended periods of time. Set a routine for heating and cooling system maintenance, including annual tune-ups by an HVAC contractor, frequent filter changes, and sealing leaky duct work.

Maintain the exterior: Your home’s “envelope” requires care not only for curb appeal but also to protect its structural elements and energy efficiency. Immediately address such regular home maintenance issues as damaged siding, clogged gutters and insufficient grading that keeps water near the structure. Also do a regular, thorough check of your roof’s condition so that you can address trouble spots and stay ahead of repair needs.

Make utility bills manageable: Unlike most rental situations, home ownership puts you in charge of covering all utilities. If you’re a first-time buyer with sticker shock when you get your power and water bills, take steps to manage your energy dollars as well as home comfort. Budget for foreseeable seasonal fluctuations in energy needs (like summer cooling and winter heating), and check into plans offered by local utility providers that allow you to distribute costs evenly over a 12-month period rather than paying right-now prices. Also look for ways to trim costs with minor energy-saving improvements, like installing a programmable thermostat or fitting the bath with WaterSense-approved fixtures.

Establish a contingency fund: Even if you’re in a brand-new home that’s under warranty, it’s wise to have a contingency fund for the unexpected home maintenance expenses that invariably crop up.  You never know what may happen a blizzard, major hail storm, flooding, tree falls onto your home, etc.  Insurance will help you deal with issues such as these.  Make sure though that you have contingency funds to cover your deductible in case you have to make an insurance claim.

Maintaining such a financial safety net will come in handy when you least expect it, and also provide backup as you approach longer-term home improvement needs and decisions. Add this critical element to your home maintenance strategy, and you’ll be able to relax and enjoy the privileges of home ownership all the more.

To speak with a Prudential Vision Properties‘ REALTOR today, please call 573.449.6200 or email us at Info@PrudentialVision.com.  Prudential Vision Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company.  Equal Housing Opportunity.

By: Jody Calvin

Buying a new home can be a huge, complex undertaking, especially when it’s your first time. That’s why it’s important to have an experienced real estate agent guiding you along the way.

In a survey conducted earlier this year by Prudential Real Estate and Relocation Services (PRERS),  a Prudential Financial, Inc. [NYSE:PRU] company, 75% of respondents highlighted the importance of real estate agents in the process of buying or selling their home, with only 24% saying agents are helpful but not imperative.

“Americans continue to see real estate agents as having a very important role in helping them price, buy and sell their homes,” said James Mallozzi, PRERS’ chairman and chief executive officer. “Although the data underscores the value real estate agents provide, it also shows that the industry needs to continue to work hard to meet clients’ unique needs.”

First-time buyers need to look at their financial situation and crunch the numbers to see if this is the right time to buy. Chances are the numbers they see today will be the best they will see for some time, which is why so many are considering homeownership.

Still, understanding the money that goes into a home purchase is important. The biggest mistake new buyers make is underestimating the costs of buying a house and maintaining it over time.

Homebuying requires more than a down payment as closing costs and future expenses will figure prominently. Many experts agree that homeowners should have 1%-3% of their homes’ purchase price in savings for improvements and surprise expenses. Mortgage experts also say it’s wise to have at least six mortgage payments in the bank after a closing.

While those numbers may not be feasible for everyone, if you are spending above your means on a new home, you may find yourself in financial trouble fast.

Inspections are important for the first-time buyer, as they list repairs that will be needed for the home. A buyer should put together a short-term and long-term plan based on the inspection so they know how much money they will need in the months and years ahead.

As renters, people are accustomed to paying rent and basic utilities. As homeowners, you’ll also pay for water, sewer and trash collection. Then there are property taxes, homeowner’s insurance and homeowner’s association dues, plus yard care, snow removal and other expenses unique to your location.

To be sure, buying a home is one of the largest investments you’ll make and when done wisely, it can be one of the best decisions of your life. Your real estate agent will help each step of the way, first helping you establish a realistic price point for your home purchase and a clear understanding of your monthly expenses.

Jody Calvin can be reached at 573.449.6200. Prudential Vision Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Real estate consumers today can find ample value in distressed homes – properties that are under a foreclosure order or up for short sale. In many cases, however, “distressed” speaks more for the condition of the homes than their recent financial histories, as they’ve sat empty for extended periods and have been subject to vandalism and theft.

Those considering homes in need of repair and renovation should consider a 203k mortgage, which enables homebuyers to finance both the acquisition and rehabilitation of the property with just one loan.

“FHA 203k purchase loans are the perfect financing vehicle for homeowners seeking the value proposition offered by REO homes,” said David Wind, president and board chairman of White Plains, N.Y.-based Guaranteed Home Mortgage Company, in a company statement this June. “Home buyers’ ‘perfect’ home can be purchased in less than perfect condition with a single-close loan product that allows repairs and remodeling.”

There are two types of 203k loans: the 203k streamline and the full 203k. The 203k streamline is the most popular among homebuyers and lenders.

“The maximum allowable in repairs is $35,000 under the 203k streamline and it does not allow any structural repairs to be done to the home, unless [the repairs are] a result of an unforeseen circumstance,” explained David Krushinsky, a certified mortgage planning specialist for Mesa, Ariz.-based AmeriFirst Financial Inc. “The full 203k allows structural repairs and will allow the buyer to exceed the $35,000 in home repairs. Both loans allow up to $1,500 in swimming pool repairs.”

Contractors chosen to perform repairs must be licensed, bonded and insured, and they usually must provide the lender with a resume and two client-reference letters.

“After the close of escrow is when all the rehabilitation work begins,” said Krushinsky. “Funds usually aren’t released immediately so it’s important for your contractor to start work in a timely manner. Typically, if they’ve been in business, they have existing relationships with vendors so they can order materials and begin work. If not, the project may take longer than anticipated.”

Since the 203k mortgage is based on the home’s potential value after repairs — not its existing value — you can be approved for a higher loan amount. The mortgages also carry long-term-fixed rates, are insured as soon as they fund, and include escrow accounts for the scheduled repairs.

Loan amounts are capped according to local FHA limits. Only owner-occupied properties of one to four units qualify for 203k mortage financing; homes also must be at least one year old.

Dan “Bingo” Bingenheimer can be reached at 573.449.6200. Prudential Vision Properties is an independently owned and operated member of Prudential Real Estate Affiliates, Inc., a Prudential company. Equal Housing Opportunity.

Home buying can be a long and tiring process.

It can be stressful physically, mentally and emotionally.  But once you step into a house that is ALL yours, you realize that it was definitely WORTH the strain.  Here are 10 things that you can keep in mind to help make sure you have all your hair by the end of the process.

1. Get your finances in order
“The seller wants to know that if they do accept the offer, that barring catastrophic title issues or inspection issues, the deal is going to go through,” said Gary Dwyer, broker-owner of Buyer Agents of Boston. Another expert recommends having a full pre-approval within the past 30 days: “Six months is no good anymore, because the rules keep changing.”

2. Know your timeframe
“As a shorter-term buyer, you might consider whether the place is a good investment, and if it’s the kind of property that’s going to be attractive for the next buyer…A house near train tracks, for instance, is probably not what most people are looking for. But for someone who’s planning to stay longer, a good school system or larger lot size might make up for the trains thundering past.”

3. Investigate market conditions
One of the benefits of working with a REALTOR® is that they will have an idea of this, and if not they have the tools to do the research.  Your REALTOR® will investigate what comparable properties have sold for over the past three to six months.

4. Search and buy within your means
“If the housing crisis has taught us anything, it’s that buying with the expectation that prices will continuously go up — and that if you can eke out the payments each month, you’ll be in a good spot in the long run — isn’t such a good idea.”

5. If you’re waiting for prices to go lower, think again
Real estate is continually changing.  There are many people waiting for prices to continue to drop, but they may be missing out on their dream home.

6. Don’t get too sucked in by appearances
Buyers should keep in mind that many sellers will try to present their homes in the best possible light. Don’t count on items that are in the house when shown to be there after you have purchased the home.  Many times a REALTOR® will have the home staged.  In that case, the “stuff” will be taken out when the sellers leave.

7. Have questions prepared
Be ready to answer questions regarding age of the roof, heating system, hot water heater, windows, etc.  Also be prepared to answer, if the basement has taken water in the time the seller has been there, if there’s a sump pump; and what utilities and homeowner insurance generally cost. If there’s been recent renovation work, buyers should find out if all building permits have been signed off, and if all of the contractors and sub-contractors have been paid in full. If there’s a pool, buyers should ask when the last inspection was done to check the back flow preventer.

8. If you’re thinking of buying a brand new house…
If buying a new house, take into consideration that no one has lived in the home to “test it out”.  If someone has lived in the house, they have been there to know if there is water that comes in the basement when it rains or if there are drafts in the house.

9. If you’re buying a condo, know the rules
Lenders have become more strict in this market.  Some would-be buyers have been turned away from getting financing.  Many lenders want buildings to be at least 50% owner-occupied.

10. Think about a home’s intrinsic value
Is this is an investment decision, consumption decision or both?  Think to yourself “Is this a house where I can see myself raising a family” or “Is this location good for me and my interests”.

To talk with a Prudential Vision Properties agent today, call 573.449.6200 or email info@PrudentialVision.com.