YOUR FIRST HOME. Purchasing one is a rite of passage that most non-homeowners dream of. Besides the intangible benefits, homeownership lets you build equity, and is the single biggest tax break available to most consumers. Here’s our look at some smart strategies for getting in the door.
First: Pay Off Your Debt
It’s a common mistake for home-buyers-to-be: They focus on saving as much money as possible for a down payment instead of paying off other debts.
How Much Can You Afford?
The answer to that is a function of two things: How much you can borrow and how much of a down payment you can muster. As a rule of thumb, your annual mortgage payment, taxes and homeowner’s insurance shouldn’t exceed 28% of your gross income.
Types of Loans
Now you’re ready to start shopping around for the right loan. A first-time home buyer with a steady job and good credit can buy a home with less than a 20% down payment.
Questionable Credit
Worried you don’t have perfect credit? You may yet qualify for a loan insured by the Federal Housing Administration, or FHA. These government-insured loans are issued with even more lenient credit criteria. You can also put down as little as 3.5% for an FHA loan. A portion of closing costs may be used to meet the 3.5% cash requirement.
Down-Payment Assistance Programs
Still having trouble coming up with that down payment? Each year HUD gives states and municipalities money to distribute to low- and moderate-income families for housing.
Read more: Tips for First-Time Home Buyers – Spending – Deals – SmartMoney.com
In Massachusetts an estate of homestead protects a homeowner’s primary residence from the claims of certain creditors. Prior to the change in the law the declaration of homestead protected the equity in the home for up to $500,000 of its equity in the event the home owner is sued. That is, if a homeowner is successfully sued in court, $500,000 of the home’s equity could not be touched by an attachment and or execution of sale by the judgment creditor. To acquire the homestead a homeowner would need to file a written declaration and record it with the county Registry of Deeds.
The Massachusetts Legislature has recently passed long awaited revisions to the Massachusetts Homestead Act.The revised law now provides automatic protection up to $125,000 on a homeowner’s primary residence, and a written homestead can also be filed to increase the protection up to $500.000. The act also provides homeowners additional protection: More… »
Turmoil in Libya and Middle East countries may send oil prices up and affect mortgage rates.
If investors fear that rising oil prices will derail an emerging recovery, they will remove their money from stocks and put it into safer bonds, especially government Treasuries. That will help lower mortgage rates. More bond purchases will push bond prices up and their yields, or their interest rates paid to bond owners, down. Mortgage rates would also decline, since they cannot be lower than government bond rates.
That’s exactly what’s been happening this week. Oil prices went over $100 a barrel, its highest price since September 2008. Mortgage rates have declined for three consecutive weeks, with the average rate for the 30-year fixed-rate mortgage declining from 5 percent to 4.84 percent last week. Read more of what Michael Kling says here.
Long-term fixed rates decreased for the third consecutive week, according to Freddie Mac’s Primary Mortgage Market Survey.
The 30-year fixed-rate mortgage (FRM) averaged 4.87 percent with an average 0.7 point for the week ending March 3, 2011, down from last week when it averaged 4.95 percent. Last year at this time, the 30-year FRM averaged 4.97 percent.
The 15-year FRM averaged 4.15 percent with an average 0.7 point, down from last week when it averaged 4.22 percent. A year ago at this time, the 15-year FRM averaged 4.33 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.72 percent this week, with an average 0.6 point, down from last week when it averaged 3.8 percent. A year ago, the 5-year ARM averaged 4.11 percent. More… »
HUD’s videos are easily accessible from HUD’s website as well as from HUD’s YouTube channel.Keeping up with the changing times and the push of social media the Department of Housing and Urban Development (HUD) has set up a YouTube Channel. HUD has unveiled three how-to videos to assist potential homebuyers find an affordable home, shop for the right mortgage and what to expect at closing. More… »
With all of the recent talk of improper foreclosures having taken place, and the issues with bank owned real estate title problems, the question of the need for title insurance has been a hot topic. I have always stressed the importance of purchasing an owner’s policy of title insurance. Regardless of who is selling the property, how long it has been in the family or how familiar you or the seller may be with the property you just never know More… »
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Title insurance underwriters, concerned about the risk in insuring short sale flips have taken a position of not insuring them. Old Republic Title Insurance announced to it’s agents last month that it would no t authorize the issuance of lender or owner title insurance policies on short sale flip transactions.
So what is a short sale flip?
A short sale flip is when a property is purchased by a real estate “investor” from a seller who has negotiated with the current mortgage holder(s) to release the mortgage(s) for less than what is owed, the purchaser of the property then flips, or resells, the property for a profit. More… »
Last night FEMA made Disaster Declarations for much of Mass, RI and NH (see counties affected below). Lenders are going to require the appraiser go back out and do a re-inspection prior to funding to show that the property is undamaged / unaffected by the disaster. Be prepared for the phone calls. Be prepared to let the appraiser in quickly. Be prepared for potential delays to your closings. Be aware that this is not just Prospect Mortgage, this is going to be the case with any lender.
Here are the counties:
Massachusetts:
Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester Counties.
New Hampshire:
Grafton, Hillsborough, Merrimack, Rockingham, Strafford, and Sullivan Counties
Rhode Island:
Kent, Newport, Providence, and Washington Counties.
If you have questions please do not hesitate to call or email me.
An index of over 300 home builders, which shows the demand for new homes. The index runs from 0-100, so a rating of 50 would mean that demand for new homes was average. Data used in the index is provided by the National Association of Home Builders (NAHB).
The index is not as comprehensive as formal housing reports like new home sales or MBA mortgage applications, the index is more like a supplemental indicator for predicting housing trends.
The NAHB Housing Market Index is used to provide general insight to where the housing market is heading. Because new home sales reflect ‘big ticket’ items that require construction and investment, the housing market is often considered an indicator of the direction of the economy as a whole. Growth in the housing market usually means subsequent spending, generating demand for goods and services and the employees who provide them.
he index is not as comprehensive as formal housing reports like new home sales or MBA mortgage applications, the index acts more like a supplemental indicator for predicting housing trends. As such, the NAHB Housing Market Index is still able to provide general insight to where the housing market is heading. Given that new home sales reflect ‘big ticket’ items that require construction and investment, the housing market is often viewed as an indicator of the direction of the economy as a whole. Growth in the housing market will spur subsequent spending, generating demand for goods and services and the employees who provide them
The Washing Post, LA Times and other sources are reporting an increased account of the use of borrower loan “worksheets.” In an effort to avoid being bound by newly implemented RESPA (Real Estate Procedures Act) regulations governing real estate mortgage consumer Good Faith Estimates and Settlement Statements, some mortgage lenders have been providing potential borrowers with worksheets that estimate what their loan might cost. These “worksheets” are completely unregulated and were not at all anticipated under the recent RESPA reform.
The loan scenario-forms/worksheets have no requirement for accuracy and loan officers are not bound by any sort of disclosure. Ultimately, the lender still must provide a regulatory Good Faith Estimate and the Settlement Statement (HUD Form 1) must conform to it, but right now the average consumer is not aware of that fact. Once the loan shopper is “satisfied” with what was “disclosed” on the worksheet, and only days before closing, the consumer is presented with the obligatory GFE.
Loan officers and lenders claim the worksheets are necessary to remain competitive and that the new regulation is too strict to be a practical benefit to the consumer. The regulatory demand for 90% accuracy is overbearing say some mortgage professionals.
A HUD official said that they will continue to monitor the practice and update the reform accordingly.
In the mean time mortgage shoppers should be certain that they are working with experienced, trustworthy lenders and loan officers. If you need the name of a local trustworthy loan officer – call me anytime and I will introduce you to one of my finest lender clients.
This is the real estate blog for the Law Office of David R. Rocheford, Jr., P.C.. Posts to this blog include topics of interest to the real estate and mortgage lending community. Posts also may also include topics that relate to personal and business development, humor and just plain interesting information.
etts an estate of homestead protects a homeowner’s primary residence from the claims of certain creditors. Prior to the change in the law the declaration of homestead protected the equity in the home for up to $500,000 of its equity in the event the home owner is sued. That is, if a homeowner is successfully sued in court, $500,000 of the home’s equity could not be touched by an attachment and or execution of sale by the judgment creditor. To acquire the homestead a homeowner would need to file a written declaration and record it with the county Registry of Deeds.
David Bremer
