Posts Tagged ‘new plan to help homeowners’

Are You Ready to Find a Home?

Friday, July 22nd, 2011

Have you been considering buying a home, maybe for the first time, maybe to move up or down? Have you been waiting for the market to hit bottom, for prices to fall, for loan rates to get lower? Guess what? It is that time. Yes, I am a Realtor, and my telling you this may sound self-serving, but let me tell you why that is not the case:

1.  Rates are still low. They will get higher – that is something I would be money on. There are a few reasons why. One is that they have been historically low for a long time and it is inevitable. Another reason is that there could be some big changes coming up in the loan industry (see below), which will make them rise.

2.  Qualifying for a loan is not going to get any easier. Lenders are still reeling from the housing crash and make it difficult to qualify new borrowers (believe me, I have seen it happen to my own clients). If the new rules pass in September, come October 1 loan limits will decrease, meaning buyers will have to put MORE money down in order to qualify for a loan, and limits will be lower so that means less of a loan (buyers will have to buy smaller homes, or maybe even consider different areas/neighborhoods).

3.  Down payment requirements could rise. If the loan limit rates decline the downpayment amounts will increase. Borrowers will have to pay more money up front to get a loan. This will make buying a home a pipe dream for many Americans.

4.  There are still some great loan products out there. FHA loans require much lower downpayments and better interest rates. If the new limit restrictions pass they will have an effect on these loans.

5.  Selling a home could get much more difficult. If the loan rates change it may effect sellers the most, especially in higher priced areas like San Diego county. Buyers who could qualify for a loan to buy a home may no longer be able to afford that much house, so sellers may have a hard time finding qualified buyers. Many homeowners may not be able to sell their homes, which could lead to more foreclosures. Property values will go down, but who will buy these properties? One theory is that the lenders will simply rent them out rather than try to sell.

6.  It is a great time to negotiate! With the market slower than usual for the time of year, and the many well-priced homes out there that are available (especially short sale and lender owned properties), buyers are in the driver’s seat as far as negotiations are concerned. There are some stubborn sellers out there, but if you encounter that situation you can always find another property that is ripe for negotiation.

7.  Learn from who is buying now. If you look closely, especially in the attached home market, you will see many investor buyers. As I have said before, this is a sign. It is a sign that now is the time to buy. I am personally working with multiple investor clients right now, and they are getting great deals on short sale and lender owned properties.

I get asked all the time what the market is like, how we are faring here in North San Diego. The market is doing much better than in some other areas of the country, but we are still struggling a bit. Prices have come down, and will likely continue to do so. If the new loan limit reductions pass it will create qualification problems for many buyers and for sellers as well. Right now you can still lock in a very low rate (today’s conforming rate on a 30 year fixed mortgage is  4.5% with no points). There is a decent amount of inventory out there.

So, here is my pledge to you: I will do my best to help you find the right property, at the right price – if you don’t there is no pressure at all. Use me as a tool to help you, because that is what I am here for. I will provide all the information you need about any home we find. You don’t need to sign any agreement, I won’t make any demands on you. I offer you honesty and professionalism, and all you have to do is call me. I will be around all weekend. 760-310-9466

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Important NEW Information About the Homeowner Affordability and Stability Plan (Part 2)

Friday, February 27th, 2009

For those of you who read my post of a few days ago (How the new Homeowner Affordability and Stability Plan Can Help You, February 24)), you should know that over the last several days there has been a great deal of information released on the details of this plan, of which I feel the need to share. I would encourage you to read the prior post in conjunction with this one.

As the author of a book written to help people through the foreclosure mess (www.MortgageWalkawayOptions.com), I was particularly optimistic about the new plan, thinking that so many people would have a new option available to them, and would thus get help. Since the plan goes into effect next week, on March 4, there have been many questions, information released on a daily basis, and much argument on late night political and news shows over the plan. Today I spent a lot of time pouring over some of the information, which I will summarize.

1. How is Eligibility Determined Under the Program? It is important to know that ALL of the details will be announced on March 4, however from the information available it is easy enough dreamstime_5619602to figure out some of the key points of the plan, but here are the main requirements:

a) You must make enough income to be able to afford new payments

b) The program is limited to loans held or securitized by Fannie Mae or Freddie Mac. To find out if your loan is held by either of these entities you can call your lender after March 4.

c) Your home must be your primary residence (no second/vacation/rental properties). Multiple unit properties WILL qualify as long as you live in one of the units as your primary residence.

d) Your loan cannot exceed current Fannie Mae or Freddie Mac loan limits (this could eliminate many people).

e) Your lender is NOT REQUIRED to modify your loan‚the program is voluntary. As I mentioned in my other blog there are financial incentives to lenders to offer the modifications.

2. Will Principal Balances on the New Loans Be Reduced? NO. While the wording in the plan did not indicate this, it has become clear that the new loan that is created will lower your payments (because you will have a new, lower interest rate), BUT there will be no reduction in your principal balance. As I mentioned in my other post, you will have the opportunity to reduce that principal balance by $5,000 at the end of 5 years if you are current on all your payments at that time, but other than that the balance will be unaffected. Caveat: If you are a borrower paying interest only payments and you refinance to a lower, fixed rate you may not see your payments go down, BUT you will likely save a great deal over the life of the loan.

dreamstime_6093122 3. What if You Have Both a First and Second Mortgage? The ball is in the lender’s court on this one. As long as the amount due on your first mortgage is less than 105% of the value of the property, the lender of the second loan can choose whether or not you will be able to refinance; this will basically depend on whether the second lender can remain in second position and on whether you can afford the new payment terms on the first mortgage.

4. Interest Rates on the New Loans: These will be determined by the market rates and will typically be 15 or 30 year term mortgages with fixed rates. Good news: there will be no prepayment penalties or balloon payments.

5. Do you Need to be Behind on Mortgage Payments to Qualify? No. As long as you have sufficient income to make payments on the new loan and are at risk of imminent default you can qualify under the program (assuming you meet the other criteria).

I hope this is a start to clarifying the program for everyone. It certainly has opened my eyes. The best piece of advice I can offer you is to GET EDUCATED and understand other possible options that may be available to you. My book provides this information in a very basic format if you need more information. You can download it at www.MortgageWalkawayOptions.com.

I thought maybe this book might become obsolete in light of the new program, but now more than ever it is important to understand all options. To find out if you qualify under the new legislation please call your lender after March 4 and tell them you would like to be considered under the new Homeowner Affordability and Stability plan. Best of luck to you.

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Promising New Mortgage Workout Plan in the Works

Tuesday, February 3rd, 2009

Hot off the wires: there is a bill pending that would help people facing foreclosures in their ability to work out new mortgages. It would allow judges to authorize loan terms for primary residences after the owners have declared bankruptcy. This is a brilliant idea and in my opinion has the most potential of anything I have seen so far in the foreclosure assistance arena.

The argument against the bill is that many lenders would likely be hit hard. Not only would they lose the authority to negotiate new loans with lenders, but they could also be dragged into bankruptcy court by millions of defaulting borrowers. This would likely cause lenders to lose even more money than they would if they actually worked out the loans sitting on desks of thousands of loss mitigation department employees.

Naysayers insist that the bill would trickle down to new homebuyers via higher interest rates coupled with larger required down payments. This would obviously be a result of lenders making up for their losses by trying to prevent the same thing from happening in the future‚the risk of a judge taking over their job would be great.

Those supporting the bill, including President Obama and most of the Democratic House and Senate members, feel this program would spare taxpayers money since it would be handled by the courts and not take money from bailout programs that earmark funds for mortgage modification programs. It would most likely prove to be much more efficient than individual lender workouts; for one because many lenders have way too many files to deal with and cannot dedicate the time needed to each borrower, and secondly because many lenders change policies and/or flat out change their minds in the middle of the loan modification process. Unfortunately as many people facing foreclosure know, it is a nightmare to attempt to deal with the lender.

If you are in the middle of attempting a workout with your lender, or if you forsee the need to do so in the future, hold onto your hats. If this new bill is passed there is no telling how quickly it may take effect. But if the new administration gives any indication hopefully it will help millions of homeowners in a more efficient way, allowing more people to stay in their homes.

For up to the minute updates on this and other pending legislation and program review, go to www.MortgageWalkawayOptions.com. If you purchase my book on foreclosure options you will be able to access our update link, which provides constant updates on everything related to foreclosures and mortgage workout programs.

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