By Brian & Amber Fosnaugh | Agent in Portland, OR

    Posted Under: Market Conditions in Portland, Home Buying in Portland, Financing in Portland  |  April 30, 2014 1:29 PM  |  266 views  |  No comments
    Are you on the home-buying sidelines this spring because you think you wouldn’t be able to qualify for a mortgage? Do you know what sort of FICO credit scores are being accepted by lenders at the moment — they’re lower than they were a year ago — and whether your score might now be good enough?
    You may be part of the surprisingly large crowd of folks who fear the home-loan unknown. A new national consumer survey found that 56 percent of all potential purchasers of homes — people who don’t own now but hope to during the coming 24 months — say they’re out of the market because they don’t want to face the possibility of rejection by lenders. Even 30 percent of current homeowners believe they wouldn’t pass muster today.
    Using a statistical sample of 1,055 Americans 18 and older, survey research firm OmniTel — polling on behalf of mortgage lender loanDepot — documented widespread uncertainty and lack of specific knowledge about current market conditions relative to qualifying to buy a home. According to the survey, 74 percent of potential buyers who would need a mortgage concede that they have not scoped out the current market or taken the steps needed to qualify. Many potential buyers believe that they need near-perfect credit scores to get a home loan. Half of those surveyed said they had no idea what minimum FICO score is needed for a mortgage and nearly a fifth (18 percent) said the minimum score might be 770 or higher.
    Debt-to-income ratios are another insurmountable obstacle in many potential buyers’ eyes — enough so that they don’t even try to obtain a mortgage. Most lenders use two forms of debt ratios: a “front end” ratio that compares the monthly costs of the proposed new mortgage and other housing expenses with the applicant’s monthly income; and a “back end” ratio comparing all recurring monthly debt obligations, including housing expenses, student loans, credit cards and the like, with the applicant’s monthly income. Roughly a third of all potential buyers on the sidelines believe their debt ratios are too high.
    But what’s the statistical reality on debt ratios, FICO-score minimums and down payments? What are lenders approving? The best answers come from Ellie Mae, a company whose loan origination and tracking software is widely used by lenders. Every month, Ellie Mae analyzes a huge sample of new mortgage originations nationwide and issues an overview report rich with the sort of detail that buyers sitting on the sidelines could use.
    Here’s what it found in its report on March, released last week:
    ●Thirty-three percent of all new loans last month had borrower FICO scores below 700. A year ago, it was just 27 percent. (FICO scores max out at 830, which is considered excellent credit; applicants with scores under 700 present higher credit risks to lenders.) Federal Housing Administration-insured home-purchase loans had an average FICO in March of 684. Conventional mortgages, those designed for purchase by investors Fannie Mae and Freddie Mac, still have relatively high FICOs: They averaged 755 in March, but that was down slightly from 759 a year before. Lenders are doing far fewer refinancings this year, so they are loosening up on FICO minimums for purchasers.
    ●Debt ratios also are more generous than many sidelined potential borrowers probably imagine. FHA’s average front end (housing costs) ratio last month for purchase loans was 28 percent. In other words, if your projected housing and mortgage-related costs represent 28 percent of monthly income, you’re average. Fannie Mae and Freddie Mac loans averaged 22 percent ratios on the front end. Back end (total recurring debt) ratios for FHA averaged 41 percent. For Fannie and Freddie, it was lower: 34 percent.
    ●Down payments can be small if that’s what you need. FHA’s average down payment last month for home purchases was 5 percent, but many borrowers put down just 3.5 percent. Fannie and Freddie also allow 5 percent down, provided you can pay mortgage insurance premiums. Down payments on VA loans can go to zero if your veteran status allows you to qualify. Department of Agriculture loans — which are designed for home buyers who live in small towns — also allow for down payments of zero.
    The point here: If you’re on the sidelines, check out what’s really going on in the mortgage market. There may be more opportunities — even in an era of tighter underwriting — than you think.

    *courtesy of the Washington Post

    Posted Under: Home Buying in Portland, Financing in Portland, Home Ownership in Portland  |  March 18, 2014 11:50 AM  |  386 views  |  1 comment

    It's never too soon to start planning ahead if you hope to buy your first home within the next year.


    That's the key message that real estate and mortgage brokers say prospective first-time homebuyers should take away from any preliminary thoughts or discussions about buying.


    Variables such as loan-qualifying guidelines, interest rates and house prices aren't within your control and might change before you're ready to move forward. But it's still smart to start educating yourself about factors you can control, such as your down payment, credit score and housing needs and wants, as early as possible, says Julie Miller, branch manager at Broadview Mortgage in Tustin, Calif.

    "It's important to have a plan in place to ensure you're on the right track for qualifying for a mortgage," Miller says.


    1. Find out how much you can borrow

    To come up with your one-year plan, you'll need to talk to a lender or mortgage broker who will help you figure out what type of home loan will meet your needs and how much you can borrow to buy a home based on your personal financial situation.

    "You'll get to find out: Are you qualified for a $300,000 house or $400,000 house? And, based on your current credit, how much would that price require you to put down and what would your payment look like?" Miller says. "You'll have a much better idea of the guidelines for the different types of loans and what will be required to get the loan you'd really like."


    The mortgage pro can also help you review your credit history so you can dispute any errors and make other changes that will better position you to purchase a home.


    2. Decide where you want to live
    By setting your target price range early, you'll spend less time finding the specific house you want, says Tim Deihl, an associate broker at Gibson Sotheby's International Realty in Boston.

    Starting early can also help you figure out whether you want to live in a denser, more walkable community or a spread-out place where you'll have to drive to shops and other amenities. Think about whether you want to live in a certain school district or near a particular public transit line.


    "You can never fine-tune your search too early," Deihl says. "Having a good idea of the type of neighborhood you're looking for and the qualities within that neighborhood that are preferences versus must-haves is really important."


    3. Find a no-pressure agent

    Once you've settled on an area, talk to one or more real estate agents. Select the agent you want and rule out agents who won't be patient with you, Deihl says.

    "If you're working with an agent who's going to push you into making a decision when you're not ready, you're probably not working with the right agent," he says. "Be happy you sat down with them a year ahead of time rather than three months ahead of time because you can cross them off your list."


    4. Tap hidden housing market

    Connecting early with an agent who's familiar with the area you've targeted can also help you find out about homes that aren't yet listed or are pocket, or so-called off-market, listings, says Ken Pozek, a real estate agent with Keller Williams Realty in Northville, Mich.

    During the planning stage, take advantage of open houses, which are public invitations for prospective buyers to walk through for-sale homes and meet the agents who represent those properties' sellers.


    "Open houses are more popular than ever," Pozek says, "and the agent is there to educate you."


    5. Research homes online

    If you'd rather shop online, you can research neighborhoods, homes and agents on real estate websites that contain a wealth of information and data. A caveat is in order, however.


    "Early in the stages of looking for a home, online is a great place to start. You get a good general sense," Pozek says. "Unfortunately, there is also a lot of bad information on real estate websites. There is possibly a lot of false hope there. Realize that not everything you see online is 100 percent accurate."

    Some homebuyers take an analytical approach to house-shopping, putting together lists of neighborhood and home characteristics they need and want. Other buyers are more emotional about their decision.


    Either way, preparation is crucial because, as Pozek adds, "it's a seller's market, so you don't have a lot of time to lollygag and try to make a decision" when you do decide to buy.

    *courtesy of MSN Real Estate


    Posted Under: Home Buying in Portland, Financing in Portland  |  October 16, 2013 10:54 AM  |  194 views  |  No comments

    Buying a home can be both exciting and overwhelming for the first-time homebuyer. If you've decided to take the plunge into home ownership and have already started the search process, make sure you're not making some common first-time homebuyer mistakes.

    Your upcoming investment could end up being a bad decision if you overlook some important facts about home ownership and sign that contract before you're really ready.

    Here are five mistakes first time homebuyers need to avoid:

    1. Searching for the dream home before getting prequalified for a loan. Save yourself the disappointment of not being able to afford the home of your dreams by getting prequalified for your loan before you start house hunting. Instead of picking out a price range and searching listings, take the time to talk to a lender about how much house you can realistically afford and what the monthly payment breakdown – with all taxes and other fees included – will be. The amount you are preapproved for will help you create a realistic budget for your home search.

    2. Delaying the buying process in hopes of a better rate. Mike Schenk, vice president of economics and statistics at the Credit Union National Association, points out that adjustable rates are now at rock bottom at about 3 percent. If you really are ready to make the commitment for home ownership, talk to a lender about securing a loan at an adjustable rate instead of a fixed rate.

    3. Thinking short term. It's easy to get carried away with that new home search and overlook some important information about the neighborhood you would move to, future developments in the area and the resale value of your home. As a first-time homebuyer, the idea of selling your home in the near future probably isn't at the top of the priority list, but it should be. "Buy that first house with the idea that you can resell it with some ease should your plans change in five years," says Mike Bacsi, senior mortgage loan officer and assistant vice president at Johnson Bank. "Hold off on buying the super charming or quirky house until you are financially established and can afford the charm."

    You also need to think about the long-term effects of your decision to buy that home. If the neighborhood is undergoing any type of redevelopment phase, the value of your home could increase in the near future. If you end up buying an older home in hopes it will appreciate in value, keep in mind that your investment could be a risky one.

    4. Making an emotional decision. While the right home for you is a matter of personal preference and affordability, you need to separate your emotions from the decision before signing the contract. Turning a blind eye on that moldy basement or creaky floorboards because you're enamored with the architectural style of the house can lead to financial troubles in the future. You want to make sure you're investing in a home that will offer you a good return on your investment and ideally has a good resale value.

    Take the time to run the numbers, create a pro and con list of each property and use an objective approach for your homebuying decision. Remember that even realtors and homeowners selling a home on their own will be pitching their property to prospective buyers using all types of marketing strategies. Keep an open mind, but also do your homework to make sure you're investing in a home that you can be happy with for years to come.

    5. Overlooking hidden costs. In addition to that monthly mortgage payment, you need to consider the cost of home maintenance, utilities and property taxes. If you are buying an older home, you may end up needing money to cover the cost of repairs and renovations. While the selling price can give you a fair idea of what you will be investing for your home, you also need to look at all of the extra costs required to maintain your home and cover property taxes.

    Your lender or realtor may not necessarily be the best source for this type of information, so start researching costs on your own. Turn to a home inspector for a list of existing or potential problems that may need to be taken care of in the near future. Consider getting quotes from renovation specialists or builders in the area to price out potential updates and home improvement projects. Also, don't overlook moving costs and extra furniture you might have to purchase to furnish a larger living space.

    *courtesy of USNews.com


    Posted Under: Market Conditions in Portland, Home Buying in Portland, Financing in Portland  |  October 8, 2013 11:50 AM  |  592 views  |  No comments
    Remember the 10 percent down payment on a house? After virtually disappearing for years, it's back. 

    Around the country, some lenders are offering 90 percent financing again on all loan types. For example, San Francisco-based RPM Mortgage resumed offering "piggyback" loans in the first quarter of 2013 after discontinuing them during the height of the credit crisis in late 2007, according to Vice President Julian Hebron. (A piggyback loan enables a home buyer to put only 10 percent down without having to buy mortgage insurance. This is done by getting two loans totaling 90 percent.) MS.ads.drawAd('cau'); Related Articles You Can Live in One of American's 5 Safest Cities Why Investing in Real Estate is a Good Play: Stockpick Whiz Kid The Massive Rent Increases Are Going to Keep Coming Renting? Get the Biggest Bang for Your Buck in These Cities You Can Move to America's 5 Most Saintly Cities.
    In Monroe, NY, Rosalie Cook of Weichert Realtors says she is seeing buyer down payments range from all cash to as little as 5 percent. Mortgage lender Tom Gildea of Prospect Lending in Rockland County, NY agrees, saying that he's doing loans with as little as 5 percent down "all day long." Those 5 percent down deals are with private mortgage insurance, are only for conforming loans (less than $417,000) and are reserved for borrowers with excellent credit, verifiable income and little debt.

    Mortgages used to be easy
    Before the credit crisis of the mid-2000s, getting a home loan was simple. Your down payment was small — if you even had to make one. To qualify, all you had to do was "state" your income and sign on the dotted line.
    Of course, that was the kind of lending that got us into the credit crisis. After the bust, many lenders started requiring a minimum of 20 percent down. Coming up with that much money was a stumbling block for many would-be home buyers. In addition, buyers were already worried about the economy or were uncertain about their jobs, making buying a home not only difficult but also downright scary.
    The result: Even though home prices had plummeted and mortgage rates were at historic lows, many potential buyers were forced to sit on the sidelines for years.
    Today, many real estate markets around the country are heating up again. While the economic recovery still has its fits and starts, people are feeling confident about their jobs. They're watching their 401(k) and stock portfolios climb back to pre-2008 levels. And so, they're out looking for homes to buy again.

    Lenders have loosened up but are still cautious
    Mortgage lenders are seeing these trends, too, which is why they're starting to ease down payment restrictions. This time around, though, lenders are much more discerning about who gets to put 10 percent down. As RPM Mortgage's Hebron puts it: To qualify, your monthly housing, car, student loan, and credit card debt can't be higher than 45 percent of your monthly income. And you must have a credit score above 700.
    The good news is that more potential buyers who otherwise would have been shut out of the market, due to the lack of a 20 percent down payment, can now jump in.

    Leveraging cheap money
    Even if you have the 20 percent to put down, you might consider opting for a 10 percent down payment instead. For instance, if you're buying a home that needs a lot of work, you could put 10 percent down and use the other 10 percent to finance improvements. You might even consider investing that 10 percent in stocks or mutual funds, though that comes with obvious risks.
    A 10 percent down payment has its disadvantages, too. If you put just 10 percent down and home prices decline later, you could end up underwater — owing more on the mortgage than your home is worth. When that happens, you could be stuck in your home, unable to sell — just as so many homeowners were after the housing crisis kicked in around 2006-2007.
    Also, if you have little equity and you go to sell, you could face another problem. The size of your loan, along with the costs of selling your property, could total more than the sale price, a financial hit that can be tough to absorb.
    If you qualify for a 10 percent down payment, and it's the only way you can get into a home, it may be worth the potential risks. Bottom line: Talk to your mortgage professional and real estate agent about your options. Think strategically and long-term about what you're doing. Don't just make a 10 percent down payment because you can.

    *courtesy of Zillow.com

    Posted Under: Home Buying in Portland, Home Selling in Portland, Financing in Portland  |  October 2, 2013 8:52 AM  |  304 views  |  No comments

    A short federal government shutdown won't derail the housing recovery, but it could delay closing of some home loans.

    If the shutdown runs less than week, no big deal, lenders and mortgage experts say. Most loans take 30 to 60 days to close, and a short delay in processing won't likely affect that.

    But if the shutdown goes longer, "We will be delaying closings," says David Zugheri, executive vice president of Houston-based Envoy Mortgage.

    Q&A: 27 more questions answered about the shutdown

    The biggest holdup is likely to involve the IRS.

    When they consider a mortgage application, lenders pull borrower tax records direct from the IRS. Without an IRS response, "That will be where the holdup occurs," says Don Frommeyer, president of the National Association of Mortgage Brokers.

    At Envoy, brokers rushed in recent days to get such requests in so fewer loans would be affected, Zugheri says. Builder Fulton Homes in Phoenix did the same, says Dennis Webb, vice president of operations.

    Even so, a shutdown running longer than a week could result in loan delays, Zugheri says. He estimates 25% of his company's loan closings — or several hundred nationwide — could be delayed, largely because of the IRS issue.

    GOP: Republicans offer piecemeal plan to mitigate closure

    Wells Fargo says IRS information requests were already processed for most loans in the pipeline. New applicants will go through the same check. Wells Fargo says it expects the IRS to quickly resume processing requests once the shutdown has ended.

    FHA borrowers, who account for about 15% of the market, may see additional hassles.

    The U.S. Housing and Urban Development's contingency plan says FHA will have "limited staff" during a shutdown and that the closing of FHA-insured loans may be delayed.

    Even so, bigger lenders will continue to close FHA loans because they have authority from the FHA to assure the agency that the loan has been properly checked, says Michael Copley, retail lending executive at TD Bank.

    About 80% of FHA loans are endorsed by lenders with that authority, HUD says.

    Smaller lenders may not have that authority, so their FHA business could be affected more, Copley says.

    If the shutdown goes longer than three weeks, look for ripple effects, says Guy Cecala, publisher of Inside Mortgage Finance.

    OBAMA: President says GOP has ability to reopen government

    For instance, home sellers may be hesitant to accept offers from FHA borrowers, who are often first-time borrowers with low down payments, because they fear loan-closing delays, he says.

    Last week, the average 30-year fixed-rate loan hit its lowest level since July, Freddie Mac says. Typically, lenders lock rates for 45 to 60 days while loans get processed, says Keith Gumbinger of mortgage tracker HSH Associates.

    Consumers concerned about loan-closing delays should check with lenders to see what rate-lock extensions are available, he says.

    *courtesy of USA Today


    Posted Under: Market Conditions in Portland, Home Buying in Portland, Financing in Portland  |  September 18, 2013 10:31 AM  |  354 views  |  No comments

    You want to beat the rising cost of homes and increasing interest rates by buying a home soon — but are you going to be able to get a mortgage? 

    The latest Case-Shiller housing data shows prices have gone up a little over 12% in just a year, and the National Association of Realtors’ latest numbers are even more optimistic, showing a nearly 14% year-over-year increase. Meanwhile, the rate for a 30-year mortgage has shot up by more than a percentage point in the past three months and is now hovering a bit over 4.5%.

    Of course, those home prices haven’t rebounded to anything close to their pre-recession peak in most markets, and interest rates are still low by historical standards, so if you’re thinking of buying a home sometime in the future, doing so sooner rather than later might make economic sense.

    The “but” here is that getting a mortgage, though easier than it was a couple of years ago, is still a challenge for many Americans. Data from the Ellie Mae Origination Insight Report shows that in July, the average mortgage applicant approved for a conventional loan had a FICO score of 759. Meanwhile, even the ones who applied and were rejected had FICO scores averaging 726. This is actually an improvement over last year, when borrowers had an average FICO score of 763. But the days of waltzing into a bank with a 640 FICO score and getting pre-approved on the spot are over.

    (MORE: Housing Report: Tight Inventory, Still-Rising Prices)

    As a result, about a third of home purchases are being made by people — investors, foreign buyers, or wealthy Americans — who just plunk down cash for a house. That’s great if you happen to have $213,500 — the average amount of an existing-home sale in July, according to the National Association of Realtors — laying around, but if you don’t, here are some tips on how to give yourself the best shot at getting a mortgage.

    Improve your credit score. ”Credit is getting a bit looser recently, but even people with high credit scores are being denied loans,” says Jed Kolko, economist at real estate site Trulia.com, an observation that’s borne out by that Ellie Mae data. Order your credit report from annualcreditreport.com so you know what you’re dealing with, especially if you’ve never checked your credit before. Getting any mistakes corrected should be your first order of business. After that, look to lower your utilization ratio — the percentage of your available credit you’ve used at any given time. The typical rule of thumb is to keep it under 30%, but lower is better.

    Don’t open any new cards. This is old advice, but it’s even more important now that lenders have such high expectations. You might think adding a new credit card would help your utilization ratio, but applying for credit shortly before or during the application process pulls down your credit score. It could be only a few points, but that could affect your rate and even whether you’ll be approved for a loan at all.

    Here’s the exception to this rule: If you’re new to the world of credit, apply for the best credit card you think you can get six months or more before you plan to begin the mortgage application process. Since you’ll ding your credit score a little bit, you want to space it out so you get the benefit that credit has on your utilization ratio without taking the hit for opening the new card.

    (MORE: Rising Interest Rates and the Fate of the Housing Market)

    Put more money down. ”Zero-down loans are rare nowadays compared with the bubble years,” Kolko says. That said, don’t despair if you don’t have 20% of the purchase price saved up.

    “Lenders are more willing to work with consumers these days even if someone doesn’t have a perfect score,” says Ken Lin, CEO of CreditKarma.com. “For example, if you have a little lower credit score, but can put down 20% or maybe you only have 5% to put down but a great credit score, you can still qualify for a mortgage,” he says.

    Pay down your debt. “Because home prices are rising faster than incomes, and also because mortgage rates are rising, the debt-to-income ratio will become a hurdle for more buyers,” Kolko warns. He says monthly payments have risen 20% in just a year thanks to the combination of rising home prices and interest rates.

    “When you think about just your housing costs, your debt load— which includes taxes and homeowners insurance — should be 28% or less of your gross monthly income,” Lin advises. But once you add debt from credit cards and auto and student loans, the amount shouldn’t be higher than 36% of your income, he says. The Ellie Mae data shows that successful mortgage borrowers have an average housing debt-to-income ratio that’s even lower, at 24%.

    Give yourself more time than you think you need. Improving your credit score and socking away a down payment takes time. Lin suggests giving yourself a six-month head start. In theory, credit report errors can be cleared up in 30 days or less, but an investigation last year found that getting even simple stuff fixed can drag on for months in some cases.

    *courtesy of Time

    Posted Under: General Area in Portland, Financing in Portland, Foreclosure in Portland  |  August 13, 2013 2:58 PM  |  476 views  |  No comments

    A new state program to prevent home foreclosures launches today in 33 Oregon counties.

    The Home Rescue Program will provide a year’s worth of mortgage payments, up to a total of $20,000, and up to $10,000 in back payments to bring mortgages current.

    The Eugene Register Guard reports that the program aims to provide help to about 25-hundred homeowners.

    The Oregon Housing and Community Services agency started accepting applications online today at noon.

    To qualify, applicants must be able to show that their income is at least 10 percent lower than it was in 2011 or 2012, and meet other eligibility requirements.

    But you do not have to be behind on your mortgage payments to qualify.

    Only 100 homeowners will be accepted in the first round, because it will take time to process the applications.

    Multnomah, Clackamas and Washington Counties will be added to the program later.

    courtesy of OPB
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