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Mortgage Guidelines have changed dramatically over the last few years and John Jones has provided a fantastic summary of the changes that have occurred over the last few years. This is valuable information I thought should be shared.
Since the beginning of the financial crisis, several significant changes have occured with mortgage guidelines. A summary of these mortgage guideline changes is imperative to helping consumers understand what changes that have taken place over the last few years may affect their ability to obtain a new mortgage loan.
Contrary to popular belief, the guideline changes have involved a lot more than just higher credit score requirements. In fact, one could argue that credit scores have perhaps been the least significant factor that has changed. This assumption is perhaps my biggest reason for writing this article. Many buyers I encounter today, especially those who monitor their credit score and know they have good credit, are under the false impression that mortgage guidelines are essentially the same as they were a few years ago with the exception of higher credit score requirements. This leads them to assume that they will automatically be approved for a loan.
Perhaps they were able to obtain a mortgage quite easily a few years ago, or perhaps they simply do not understand that credit score is only one of a long list of factors that mortgage lenders consider. The main reason for their misunderstanding is because the media has oversimplified the complexity of the mortgage crisis and constantly portrays it as being caused by “banks giving loans to people with bad credit”. So it’s logical to most people to conclude that credit score requirements have been the only factors that have changed.
Unfortunately this is far from the case. That doesn’t mean that it’s impossible to get a loan nowadays, but buyers need to be aware of the other changes that have taken place with mortgage guidelines. Simply having a good credit score no longer guarantees a loan approval like it did a few years ago.
The subprime mortgage market at one point made up more than half of the mortgage market in the US. Today, it accounts for just a small percentage. Fannie Mae, Freddie Mac and Ginnie Mae now account for over 90% of the mortgage market, with the remaining share consisting largely of jumbo loans held in bank portfolio and hard money loans, which are private mortgage loans made by a variety of different entities.
In other words, FHA, VA, USDA and Fannie/Freddie Conventional loans are about the only game in town, aside from jumbo loans and the small share of hard money lenders that make loans on their own terms. Of course, hard money lenders usually demand much higher fees and interest rates than the government agencies since they are able to provide a loan when nobody else will.
The government agencies guarantee loans made by banks, they do not loan the money themselves directly to consumers. But they purchase the loans from the banks once the loan has been made to the consumer. So banks will typically not lend outside of these guidelines since they do not wish to hold these loans on their books. They would rather transfer the risk and make loans to new customers by sellling them to Fannie Mae or Freddie Mac.
Here’s a summary of changes that have taken place in mortgage guidelines over the last few years:
MOST SIGNIFICANT CHANGES:
ELIMINATION OF VIRTUALLY ALL STATED INCOME AND NO DOC LOANS
Stated income loans were originally designed as a way to simplify the mortgage approval process for self-employed borrowers who had to provide a significant amount of paperwork (tax returns, etc). Over the last several years, many lenders dropped the down payment requirement for stated income loans from 20% all the way down to 0% while at the same time eliminating the requirement to actually verify the borrower had a business in the first place.
Then came “no doc” loans, where the borrower simply had to provide their name and a social security number. At one point, a buyer with a 680 credit score could purchase a $750,000 home with no money down with no verification of employment, income or assets. Needless to say, these loans mostly resulted in foreclosure and massive losses to the investors.
WHAT’S DIFFERENT NOW?
Most states have passed laws that completely outlaw stated income loans. Furthermore, banks realize that loans made to individuals that can’t document their income through traditional means (W-2′s, tax returns, etc) have a much higher instance of foreclosure. Fannie Mae no longer purchases stated income loans. The only option most homebuyers have who can’t document their income is to seek financing from a hard money lender who is willing to take the higher risk. The rates and fees are typically much higher than government insured loans.
MANY 100% FINANCING PROGRAMS HAVE BEEN ELIMINATED
A few years ago, subprime loans allowed buyers with credit scores as low as 560 (in some cases 500) to obtain a 100% loan. Also, there was a loophole in the FHA guidelines that allowed buyers to obtain a “gift” from the seller to circumvent the 3% down requirement. Fannie Mae also had a variety of 100% loan programs.
WHAT’S DIFFERENT NOW?
Fannie Mae now requires a minimum of 3% down. FHA down payment requirements have been increased to 3.5% and the loophole allowing sellers to pay their down payment has been eliminated. 100% subprime loans have been gone for several years now, and 100% stated income loans have been retired to the graveyard of history.
PROGRAMS THAT STILL ALLOW 100% FINANCING include the USDA loan program and the VA loan program. Some government grants also may be used for down payment, but these usually have very strict income requirements. The USDA loan has some specific loan guidelines and, more importantly, geographic restrictions. 100% VA loans are still available to qualified veterans. And surprisingly, the guidelines for VA loans have changed very little. This is likely due to the fact that VA analyzes income more closely than other types of loans, which has led to fewer losses compared to subprime and conventional loans.
GUIDELINES FOR BUYERS WHO WANT TO KEEP THEIR CURRENT HOME AS AN INVESTMENT PROPERTY, SECOND HOME OR SELL THE HOME AFTER CLOSING ON THE NEW ONE
A few years ago, most buyers who wanted to purchase a different home (move-up) or even downsize to a smaller home would simply lease their current home and provide a copy of this lease to their lender to offset their mortgage payment. Then once the foreclosure crisis picked up steam, lenders began to notice that a significant amount of foreclosures were occuring on homes where buyers had purchased another home and simply let the first home go into foreclosure. This was even happening on many buyers who had perfect credit. This tactic, known as “buy and bail”, began causing a massive amount of losses to mortgage companies. Even many buyers who intended on keeping their home as an investment property or who were planning to sell the home shortly after closing on the new one began falling behind because of a slowdown in the market.
WHAT’S DIFFERENT NOW?
Homebuyers who want to keep their current home may not be able to simply show a lease to offset the payment. Fannie Mae, in most cases, requires the buyer to prove they have at least 30% equity in their current home in order to offset the current payment with a lease. They also may be required to show at least six months payment reserves for both the current and new home. FHA also requires 25% equity, unless certain conditions exist (such as moving to an area that’s not within reasonable commuting distance). Proof that the first month’s rent and/or security deposit has been obtained is often required as well. Homebuyers that are upside down on their current home or who do not meet these equity requirements may still be able to obtain a new loan provided they qualify with both mortgage payments.
RESERVE REQUIREMENTS
During the subprime boom, many lenders relaxed or completely eliminated requirements that borrowers have reserves in the bank after closing. Statistically, buyers are much more likely to have problems paying their mortgage without at least some cushion to fall back on in case of a financial hardship, such as job loss, etc.
WHAT’S DIFFERENT NOW?
While most loans do not have specific requirements for reserves, some lenders now require reserves for buyers with lower credit scores, as well as in certain situations where the overall risk of default may be higher. A good example is buyers that are keeping their current residence, as described above. In general, buyers who have little or no reserves will find it harder to obtain a mortgage.
DEBT TO INCOME RATIO LIMITS
The debt-to-income ratio is defined as the ratio of total monthly obligations compared to total gross monthly income. So a homebuyer who makes $5000 per month but has $2500 per month in debts, including the proposed new house payment, would have a debt ratio of 50%. Debt ratio requirements during the subprime boom were often allowed to exceed 60 or 70% and were completely ignored in many cases.
WHAT’S DIFFERENT NOW?
Fannie Mae recently changed their maximum debt-to-income ratio to 45% from 50%. Many lenders may also have an arbitrary requirement regardless of whether or not the loan program guidelines do or not. The automated underwriting systems have tightened the maximum debt-to-income requirements in many situations. While credit score may help to increase a buyer’s allowable debt ratios, having a high credit score alone does not guarantee an approval.
OVERLAY (ARBITRARY) GUIDELINES
This is perhaps becoming the most significant change that is affecting many loan applicants. An overlay guideline is essentially a guideline imposed by a lender that is over and above the loan guidelines themselves. For example, FHA does not have a minimum credit score requirement per se. However, I’m not aware of any lenders that do not have some kind of minimum credit score for FHA buyers. Why do lenders do this? Because even though an agency such as FHA or Fannie Mae may guarantee a loan, that doesn’t mean the lender will not incur a loss if the buyer fails to make their payments. Therefore, lenders will often analyze the loans they’ve originated in the past and impose certain requirements that may be over and above the requirements set by the federal agency that insures or guarantees the loans.
WHAT’S DIFFERENT NOW?
Most lenders have a minimum credit score requirement of 600-620 for FHA loans. Also, some lenders may either require a second-level signature from upper management on loans that are deemed to carry a higher risk of default, such as for buyers with high debt ratios, low reserves, a spotty employment or income history or buyers that are purchasing a home that’s in an area where real estate values have declined significantly.
OTHER CHANGES:
HIGHER INTEREST RATES FOR BUYERS WITH LOWER CREDIT SCORES AND LESS MONEY DOWN
Fannie Mae began this trend a couple of years ago by instituting “loan level price adjustments” for buyers with less than 740 credit scores and who were putting down less than 40% down (yes, 40%). Although the adjustments to the rate are very minor at this level, buyers with less than a 680 credit score and less than 20% down may see a significant adjustment to either their rate or to their closing costs. And since many buyers assume the rate they see advertised is the rate everyone gets, they may budget the cost for their new home based on a rate that is not obtainable based on their situation. Furthermore, many companies are now imposing rate adjustments to buyers seeking government loans (FHA, VA and USDA).
MORTGAGE COMPANIES THAT ADVERTISE RATES ON THE INTERNET, TV AND RADIO DO NOT TAKE THESE PRICING ADJUSTMENTS INTO ACCOUNT. Most advertisements disclose somewhere in their fine print that the rates they advertise assume a credit score of 740 and a 20% down payment. So don’t assume the rate you see is the rate you’re going to get until a loan officer has a chance to fully qualify you by obtaining a full credit report and also an analysis of your current situation and income.
TOUGHER APPRAISAL REQUIREMENTS
Lenders require an appraisal to be conducted on virtually all home purchase transactions to ensure that the price a homebuyer is paying for a home can be justified with recent sales data. This protects lenders collateral position in case of foreclosure. In past years, loan officers would simply call their favorite appraiser and request an appraisal.
Because of perceived conflicts of interest with this process, a new process was created called the Home Valuation Code of Contact, which restricts loan officers and production staff from communicating directly with an appraiser. The result has led to longer waiting periods to obtain appraisals and sometimes inaccurate appraisals since the management companies often select appraisers that are unfamiliar with an area. Since the appraisals are now ordered through appraisal management companies, this extra step means extra time (and money in many cases) for home buyers.
LONGER WAITING PERIODS
The Federal Reserve recently amended the Truth In Lending laws. Buyers now must wait at least seven days to close after the full terms of their proposed loan have been delivered and disclosed to them. Furthermore, if the terms of the loan change (which is sometimes not the fault of the lender and may be the result of a change outside of everyone’s control), the buyer must wait another three days to close.
While this may seem like nothing to worry about, keep in mind that the sales contract in Texas calls for a certain specific closing date. If the buyer fails to close by this date, even as the result of a federally mandated waiting period, the seller has the option of terminating the contract at their sole discretion in the State of Texas. These waiting periods can often become an issue and put buyers at risk of potentially losing the contract on their home if they wait too long to select a lender. The days of five day closings are a thing of the past, and the process of the new appraisal requirements can also cause additional delays as well. The bottom line is that homebuyers need to shop for their loan well in advance of shopping for a home to avoid any potential delays.
So in conclusion, the changes that have taken place in mortgage guidelines over the last few years have been a lot more than just higher credit score requirements. In fact, the minimum credit score of 620 that most lenders require to obtain an FHA loan is not much higher than it was a few years ago. The most significant changes have occured in the more detailed guidelines that most buyers may not even realize exist. And while it’s certainly safe to say that many changes have taken place, it’s certainly not impossible to obtain a loan if these situations can be overcome.
But waiting until the last minute to consult with a lender is a mistake that will cost many homebuyers the opportunity to qualify for a home loan. If you are considering purchasing a home, please contact me today so I can evaluate your situation and put you in touch with a lender that can consult with you at no charge to evaluate your options.
John Jones, Realtor
The Kaul Group – Keller Williams Elite, Dallas / Park Cities
8201 Preston Road Suite 265
Dallas, TX 75225
Dallas, TX Real Estate and surrounding areas of Richardson, Plano, Addison, Frisco, Carrollton, Farmers Branch, Garland, Allen and Irving.
Dallas, TX neighborhoods and subdivisions of Lake Highlands, White Rock Lake, Lochwood, Eastwood, L Streets, M Streets, Hollywood Heights, Lakewood, Coronado and Gastonwood, Forest Hills, Preston Hollow.
Copyright 2009 by John Jones, All Rights Reserved. You may reblog or republish with links back to this post.
* THIS ARTICLE WAS ORIGINALLY PUBLISHED AT http://dfwhomefinder.info *
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
As I was reading TLW’s post My New To You Year Reality Blog Post…ROAR! about Reality, it reminded me of something I had heard a number of months back that made me laugh. After hearing this, when things are out of my control, not going the way I planned or even just downright irritating, I think to myself “Is This Real Life?” and back to reality I come!
See what has made David ask “Is This Real Life?” Enjoy!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
With a New Year coming on us quickly, we all set goals or set resolutions for the upcoming year. So how do you set SMART goals? Keep it simple, keep it SMART!
outcome of the goal set.Often times we set goals and do not know how we are going to achieve them! By remembering to be SMART about setting goals, the easier they are to achieve them, or maybe even exceed them! Write them down, remind yourself of them daily and stay SMART! Once you have achieved your goals, don’t stop there! Set new goals that will challenge you further.
There is a lot to be said about setting attainable, realistic goals! The more you achieve the more excited you are about setting new attainable goals! So this year, take the time to set your goals the SMART way!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
With record storms back East causing hundreds of delayed and canceled flights, widespread power outages and horrendous driving conditions I thought it would be a good time to share the joy of San Diego with those of you who have been snowed in for the weekend.
We are looking at 70-75 degree weather for Christmas day. We may even go sailing! Christmas is beautiful wearing shorts and tees!
But no matter where you are and what you are doing, I do hope each and everyone of you have a joyful holiday season! Stay warm! Enjoy Neal and his tune!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
With record storms back East causing hundreds of delayed and canceled flights, widespread power outages and horrendous driving conditions I thought it would be a good time to share the joy of San Diego with those of you who have been snowed in for the weekend.
We are looking at 70-75 degree weather for Christmas day. We may even go sailing! Christmas is beautiful wearing shorts and tees!
But no matter where you are and what you are doing, I do hope each and everyone of you have a joyful holiday season! Stay warm! Enjoy Neal and his tune!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
You may be in a position where you need to sell your home but in doing so, you would have to either come in with money or short sell the house. So you may be thinking of what other alternatives may be available-like renting your house out.
Chris Comberrel has some interesting statistics on the advantages or disadvantages you may want to consider when making the decision to rent out your home.
A client of mine paid $590,000 for a 1,100-square-foot condo in The Woodlands, Texas two and the half years ago, but housing values have fallen so far that she figures such a move would lock in a $200,000 loss.
She has moved back into a home she still owns in the historic Houston Heights and would love to unload the condo.
The good news is that there is a light at the end of the tunnel. A real estate agent recently informed her that the condo can fetch $3,300 a month in rent. That’s enough to cover her mortgage and property taxes. She decided to lease out her condo until values rebound.
“It’ll be a tax writeoff,” she says.
No less a financier (and former do-it-yourself tax preparer) than Treasury Secretary Timothy Geithner is leasing out his Mamaroneck, N.Y. home after failing to get for it a bid he was willing to accept. If you’re one of the hoard suffering real estate buyer’s remorse, you too may be able to turn a modest profit renting out your albatross of a residence. How can that be? Thank the trove of tax breaks for residential landlords.
The first step in figuring out whether renting makes sense is to find out how much your place is worth. An appraisal is a must, but written statements from a few Realtors will do while they agree on the value and stipulate how much is attributable to land and how much to the building. (The appraisal, as you’ll see later, is essential for two separate tax calculations.)
The next step is to see how much the property will fetch in monthly rent and weigh that against the costs and tax consequences. As a landlord, you can’t claim mortgage interest as an itemized deduction on Schedule An of your tax return. Instead, you deduct interest costs, plus property taxes, monthly condo fees, insurance and anything you pay to a property manager (most charge 10% of rent) against rental income on Schedule E. You can also expense travel and other costs you incur to look after the property.
The other big tax deduction for landlords is depreciation. The tax code allows you to divide the value of your building (but not the land) by 27.5 and to claim the result as an annual depreciation expense. Here’s the first place that the current appraisal comes in. When you convert to a rental, your depreciation is based on the cost of the property plus improvements or its market value at the time of conversion–whichever is less.
She must use the $390,000 fair market value of her condo, not the $590,000 she paid. Assuming that 10% of the $390,000 is attributable to land under her building, the depreciation expense comes to $12,764 annually (and reduces her cost basis by the same amount). Other expenses added and the total is likely to exceed her $39,600 gross annual rental revenue. Almost any residential landlord with a mortgage is going to be in that boat.
The amount by which expenses exceed rent is a tax loss that can be used to shelter up to $25,000 in other income–say, from your salary–if your adjusted gross income is $100,000 or less. (The same cutoff applies to both singles and couples.) Above $100,000 the break is phased out, and it disappears completely at $150,000.
If you happen to be a real estate professional–defined as someone spending at least 750 hours a year, and at least 50% of his working time, in the business–then your career managing property becomes an “active” one and your losses are fully deductible against other income. If you fail the income test or to qualify as a pro, your rental losses don’t go entirely to waste. The net loss gets carried forward and deducted if and when you dispose of the loser real estate or you have gains from passive investments. These gains could be from selling the property in question at a capital gain or from owning other passive investments, like oil wells.
Note that “passive” is a term of art in the Internal Revenue Code and does not cover portfolio investing (stocks and bonds). So if you collect $30,000 from stock dividends and have a $30,000 loss on Schedule E, you can’t net one against the other. But you can wise up, sell the stocks and use the proceeds to pay off the mortgage. At that point you’re probably out of the loss column on the rental and pulling real cash out of the property. A good part of the cash return will be sheltered from taxes by your depreciation deduction.
How are gains taxed when you sell a converted property? A lot depends on timing. If you lived in the property for at least two years and then rented it out for less than three, you may be able to use the provision that excludes $500,000 in gains from the sale of a principal residence, per couple, from tax. (You’ll still owe gains tax on the amount claimed as depreciation.) If you sell at a loss, the only deductible portion is the loss occurring after you converted the house from personal to income-producing use. The appraisal is crucial here.
My client is hoping that sales prices will rebound in two years. Assume instead that they slide and she clears only $340,000, or $50,000 less than what her Realtors said her condo was worth when she converted it to a rental. Her tax basis in the property will be $364,500 (the $390,000 minus $25,500 for two years of depreciation). She’d be left with a $24,500 capital loss she can use to shelter taxable gains on other investments. Also, she could then claim any passive losses she couldn’t use before.
Renting does present problems. You must either maintain a property yourself or pay someone else to do it. Tax and real estate experts warn against hanging on to real estate if rent falls far short of your pretax, out-of-pocket costs. In other words, look to the tax benefits to sweeten the deal, not drive it. As always don’t take my word for it, check with your tax expert or CPA to assist you in your specific situation.
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
You have found the home of your dreams! You have made an offer, written your deposit check and the 
offer has been accepted! You are on your way to owning your new home! Everyone is telling you the things you need to do, get a loan, get an inspection, find an insurance company….but when buying your home, has anyone told you what NOT to do when buying a home?
Yes, there are things you should NOT do when buying a home!
the lender in order to make this change. It is possible to make this happen while obtaining a loan, but you do not want to make any changes without finding out the ramifications. Even if you think you are days from closing and it won’t make a difference-most lenders verify employment on the day of closing. Don’t jeopardize your new home if you can wait to make the change after you close.Along with the many things you NEED to do while buying your home, don’t forget these things NOT to do while buying your home! You will have plenty of time to get your new furniture and barbecue! Make sure you avoid anything to cause you jeopardize your purchase in any way. If you have any question, make sure and consult with your loan officer or agent!
My mother always told me, patience is a virtue!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
As a buyer or seller, permits are an important part of any transaction that involves a home that has had a remodel. Guy Berry has provided some fantastic information on some things both parties are going to want to address when buying or selling a home that has had any work requiring a permit.
You would be surprised the things that actually require a permit and the city final. Even a retaining wall over a certain height will require permits! Be sure and ask the questions if you are buying! Sellers, be prepared with the information for your listing agent when we ask!
There is always a question about what does an agent have to do regarding disclosing permit issues. If you are in a market with older homes, you can be pretty sure that there is much remodeling been done ….. much of it done WITHOUT a permit. California and several other states have used their lobbying clout to get a law passed where the agent is not legally required to go off-site to investigate the status of permits.
Agents will argue that they have no responsibility anyway because they are not contractors; how would they know about permits. If you believe that, you are RIGHT and WRONG. Before, I talk about why you might be liable, let’s discuss a little about permits.
Permits: A permit is simply the homeowner asking the governmental agency’s permission to remodel or upgrade their home. Most agencies change a fee and this has become a very profitable profit center for them. Once the work is done, the homeowner (or contractor they hire), is supposed to notify the agency so that they can inspect to see that the work is done properly. This is typically called the sign-off or final inspection.
Transactions: In most states, a seller must disclose material facts which would affect the buyers decision to buy. Having permits and finals or not having them, would be considered a material fact. It is not uncommon for these permits to be given to the buyer or the agent or buyer picking them up at the governmental agency.
Potential problems: There are a few traps in this process for the Seller, the agents and the Buyer:
- No one is looking: You may not be aware that most home inspectors exclude building code and permit issues from their inspections. Go back and look at the fine print on your last inspection and I think you will be surprised by what you find. It might also comment that their inspection was done within ASHI or some other association guidelines. ASHI is the American Society of Home Inspectors and most states have a statewide association as well. It would be the equivalent of our NAR organization. Looking at the ASHI website, I quote: The home inspector is not required to determine compliance with regulatory requirements (codes, regulations, laws, ordinances, etc.) unquote. Some go so far as to say that even if they see or suspect a discrepancies, they do not mention it since they are not required to (key word) determine whether it is in compliance. ASHI website: (http://www.homeinspector.org/standards/standards13.aspx),
- Construction industry: Contractors are notorious for doing a remodel and not getting permits. First, they don’t want someone looking at their work in case it might be wrong. Secondly, they normally don’t get paid until the work is done. So, when the work is done and the city inspector hasn’t come, they still want to be paid. So, it is easier for them to skip the final inspection. The third reason is that they might have to wait days for the inspector to come. In the meantime, they are standing around. I know when I got my kitchen remodeled, we left the ceiling open to inspect the electrical and lights and the floor open to inspect the plumbing. Too often homeowners are victimized by who do the work without permit or take out the initial permit and never get a final. So, just because your Seller hired a contractor doesn’t mean they got a permit
- What requires a permit?: It depends. Each city or county has different rules. One might require a permit for a new roof while another does not. And, things that were allowed in the past, might not be allowed today. So, someone will have to determine what the rules are in your area.
- Governmental Immunity: One of the unpublished scandals is the fact that most homeowners are expecting that for the permit fee they paid, the city inspector will catch all the mistakes made. WRONG! In most states, these inspectors have made so many mistakes in the past, they have gotten laws past giving them governmental immunity on such matters. Check in your area. And, if that is the case, your homeowners might want to hire an architect to oversee any remodeling work.
- What’s a Seller’s agent to do? The first step is to explain the issue to a Seller. The might take the position that they don’t know about permits issues. But, when you inspect the house, it should be pretty easy to spot those issues that have been remodeled or upgrades since the original house. As you inspect the house, write down those items that look remodeled. Then if the seller did the work, they should check their paperwork and disclose it to the buyer. On unknown remodeling, the Seller could go to the city and get copies for the buyer. Remember, houses don’t normally come with pools, huge decks, air conditioning, etc
- What is a Buyer’s agent to do: Don’t you just love Seller’s agents who put together a beautiful flyers saying ….new roof, new kitchen, new bathrooms, new furnace and air, added-on master suite, etc, etc. All of these items need a permit. So, if you showing a property, note these issues and find out from the Seller’s agent if they are or are not permitted. Don’t take the seller’s word for it, make them provide copies.
- Can you read a permit: But that raises another issue. Can you or your buyer read a permit. Most cities use their own form and system and it is almost impossible for a non-contractor to read the forms. If you buyer gets handed a pile of papers saying, here are the permits ……have someone who is qualified read them. Don’t take the responsibility yourself. You might ask your home inspector if they would use them during their inspection for an additional fee.
- What are the ramifications? So, what are the ramifications of buying a property without permits. It can be very painless or possibly very painful. If the work was done correctly, It might be as simple as calling the city to inspect and provide a final inspection. If codes have changed or the work was done incorrectly, here are a couple of downsides including but not limited to; City making current homeowner fix the problem, city making them tearing the improvement out at their expense, insurance not covering claims (fire, slip and fall, etc) since the buyer knew system (wiring, etc) was defective, and if legal non-conforming, not allowing the improvement to be put back.
In my work as an expert, many agents are not paying attention to this issue. You are not a contractor but you should be aware of the risks and pitfalls of buying a property without property permits.
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
I came across this article on the web and thought I would pass it along. The author, Jim Rohn, was a motivational speaker, author, and one of the fathers of the personal development industry. After I read his article, I wondered how many opportunities I miss from my own personal neglect? Colleen Do you want [...]
One of the questions that comes up in purchasing real estate is how to hold title to Real Property. In making this determination, there are many items you will want to consider; especially if there are multiple parties buying property together. Take the time to understand how each will affect you in the areas of your ability to transfer title, disposition of property in the event of a divorce or death or exposure to creditor claims. In addition, the manner in which you hold title may also affect property taxes, income taxes, 
inheritance and gift taxes as well as probate issues upon death.
If you are purchasing real estate as an individual, there are a few different forms of ownership.
When purchasing a home with multiple owners; your spouse, business partners or family members there are also ways to hold title that may determine percentage of ownership and how property will be disbursed upon death of one of the title holders.
Title may also be held in the name of a trust, corporation, partnership or LLC. Check with your lender prior to making a determination on one of these ways to ensure they will allow you to hold title in any of these manners.
How you determine you are going to hold title may be based on many factors. You will want to examine all tax consequences, survivor benefits and family circumstances prior to determining how you will hold title. Depending upon the state you are purchasing property in you will want to be sure how the laws apply.
You should not allow anyone other than your attorney of financial planner to advise you on how to hold title to real property. If you are unsure, please discuss the implications with an attorney. you would not want to make a decision that may affect you negatively tax wise or your heirs upon death.
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
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One of the first things you will be doing in your new home search is getting pre-approved for a mortgage loan. While going through this process, you will come across financing terms that you may not be familiar with. Your understanding of these financing terms will help you make an educated decision on what the best loan for you will be. In addition, while speaking with your loan officer, it is important you understand
the process. Understanding some of the financing terms will help make sense of all that is going on.
• Adjustable Rate Mortgage (ARM)~ This type of loan has an interest rate that will adjust after a pre-determined period of time. The time periods can range from 6 months to 10 years.
• Amortization ~ the way a loan is paid off, with regular payments over a specific period of time. Payments must be sufficient to cover both principal and interest.
• Annual Percentage Rate (APR)~ the actual interest you are paying which factors in fees, points and other costs paid for obtaining the loan
• Appraisal/Appraised Value ~ A report completed by a qualified professional that makes a complete market analysis of a properties surrounding area to determine a reasonable value for a home. Based on comparable properties that have recently sold.
• AUS/DU/LP~ Automated Underwriting System/Desktop Underwriter (FNMA)/Loan Prospector(FHLMC) Using completed loan application information, an automated underwriting systems retrieves relevant data, such as a borrower’s credit history, income information, asset information and arrives at a logic-based loan decision.
• Buy Down ~ Money paid to “buy down” an interest rate. Interest rates may be permanently bought down by paying points or temporarily bought down 1 year, 2 years or 3 years. Example: interest may start at 3% for the first year, 4% for the second year 5% for the remaining life of the loan.
• Caps ~ Both payment and interest rate safeguards set in place for an ARM loan that will not allow a payment or interest rate to increase over a certain amount in a given time period.
• Certificate of Eligibility~ Document given to qualified Veterans that show their eligibility to use the benefit of a VA Home Loan.
• Closing ~ The date written into your offer as when the escrow will be completed. Money will be transferred to the seller. Close of Escrow date.
• Closing Costs ~ Expenses over and above the purchase price of the property for lenders fees, appraisals, property taxes, escrow and title fees.
• Conventional Loan ~A mortgage loan that is not insured or guaranteed by a government entity. A loan that will meet guidelines set forth by FNMA (Fannie Mae) and FHLMC (Freddie Mac) (also known as a conforming loan)
• Credit Report ~A detailed report of all loans, credit cards, car payments and the payment history for each. Will include all current and closed accounts. Will also include any liens or judgements in public record.
• Credit Score~also known as FICO score. Based on the information in your credit report, it is a statistical summary of the payment history. It is a mathematical summary calculation that gives numerical values to information in the credit report. YOUR CREDIT SCORE IS AN IMPORTANT FACTOR IN OBTAINING A MORTGAGE LOAN
• Debt to Income Ratio (DTI)~ This figure is calculated by taking any long term monthly debt and dividing it into your gross monthly income to determine affordability.
• Deed of Trust ~ Document executed by the borrower evidencing the debt owed to a lender. This document is recorded with the County Recorder’s Office and will be public record of the debt.
• Discount Points ~ Prepaid interest based on 1% of the loan amount for each point. Paying discount points will help lower the interest rate being negotiated.
• Earnest Money Deposit~ Money given by a buyer to a seller to bind the contract. This money is held by the Escrow Company and will be applied to down payment at the close of escrow.
• Escrow~ A third party intermediary who will hold and disburse funds in the transaction. The Escrow Company will assist in getting paperwork signed and arrange the recording of documents.
• FHA Loan ~ A mortgage loan insured by the Federal Housing Administration. FHA loans have their own underwriting guidelines that must be met, but may also be underwritten by an automated underwriting system.
• Fixed Rate Mortgage ~ A mortgage loan where the interest rate will remain consistent throughout the life of the loan.
• Impound Account ~ An account set up for the buyer by the lender to collect monthly payments that will cover property taxes and insurance. The lender will pay these installments when they come due.
• Jumbo Loan~ A mortgage loan that is higher than the conforming loan limits that are set by Fannie Mae and Freddie Mac
• Loan Origination Fee ~a percentage of the loan amount charged by the lender to originate the mortgage loan.
• Loan to Value (LTV) ~ Based on the appraised value of the home, the amount of money borrowed. Example: A loan with 20% down payment would equal an 80% Loan to Value ratio.
• Lock or Rate Lock ~ An opportunity to lock in a certain interest rate for a period of time. Usually between 12 and 45 days.
• Mortgage Insurance, PMI or MIP~ insurance to protect the lender in the event of default required on any loan with less than 20% down. Please see a more detailed explanation in my post on What is PMI
• Note~ A written promise to pay back money borrowed from the lender. This will include the terms of the loan, interest rate, payment dates, lender and borrower.
• PITI~ abbreviation for describing a total monthly mortgage payment that includes Principal, Interest, Taxes and Insurance.
• Prepayment Penalty~ A penalty charged by the lender for paying off or paying down a loan prior to a specified date. Not as common today as in the past. It is important to ask if your loan has a prepayment penalty.
• RESPA (Real Estate Settlement Procedures Act)~ The requirement for lenders to provide detailed information to the borrower in advance of what closing costs are to consist of.
• Title Insurance~ An insurance policy issued by a Title Company that may cover the lender and the buyer in the event of unfound claims against the property.
• Truth In Lending (Reg Z) ~ Federal law requiring the lender disclose the annual percentage rate (APR) to the buyer.
• Underwriting~ A decision made to lend or not to lend money based on information provided by the borrower regarding income, employment, assets and liability. The property will also be considered in the underwriting decision. Condition and loan to value will be evaluated.
• VA Loan~ A loan guaranteed by the Veterans Administration available to qualified veterans. May require no money down.
This is a short list of financing terms that will at least help you more fully understand the basics of the loan process and some of the forms that will accompany your process. Be sure to ask questions on anything you do not understand, continue to ask until you do. We are so used to talking to people in our industry on a daily basis that often times the terms and phrases that are used are just assumed to be known to the lay person. You should feel comfortable throughout the process you know what is going on.
For information on choosing a lender, please see my post on the Importance of a Good Lender. Happy House Hunting!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
As a buyer, it is always recommended that you obtain a home inspection to know the home you are purchasing does not have any deficiencies that need to be resolved prior to purchase. As a seller, you may find out some information about your home you didn’t want to know about with the buyers inspection!
Instead of being surprised by a home inspection, a seller may want to obtain a home inspection PRIOR to listing their home and repair any items that may be a problem. You may also want to check out this good advice from David Home Inspection on items to take care of!
Here are some key points to the best home inspection.
Exterior
Roof Structure
Crawl Space
Attic
- Check for leaks and repair as needed.
Furnace
(Keep maintenance records.)- Change the filter and clean all vents.
- Make sure the unit is responding to controls and heating as it should.
Air conditioner
- Make sure the unit is responding to controls and cooling the way it should.
- If not call for service. (Keep maintenance records)
Bathrooms
- Fill sink then drain. Checking for any leaks around the P-trap while draining.
David Home Inspection Services
626-629-8499
We Proudly Serve The Areas Of
San Bernardino, Los Angeles, Orange, Riverside County California
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
Here is some more great information on Mexico Real Estate. Ixtapa is a beautiful area of Mexico and there are some great activites that happen here throughout the year. Thank you Thomas Lloyd for this informative post!
If you are thinking of buying properties in the Ixtapa real estate market it is most likely you are asking yourselfWhat s happing in Ixtapa-Zihuatanejo Cultural events are an important consideration for anyone looking for Mexico Real Estate; fishing, surfing, cheerleading tournaments, cultural celebrations, great food – Ixtapa offers a wide variety of events and activities for people of all tastes, as this sample of events from the past year shows.
Ixtapa-Zihuatanejo welcomed the year with a spectacular display of fireworks. At exactly 11:59:50 on December 31st, 2008, a 15-minute-long show of continuous fireworks began, with shapes of chrysanthemums and the traditionalcastles in the air The incredible display could be enjoyed from various beaches in Zihuatanejo and Ixtapa a real bonus for anyone considering Ixtapa Beachfront Real Estate. More than 100 different restaurants and hotels offered wine, liquors and Ixtapa-Zihuatanejo s famous cooking traditions to visitors and residents who celebrated the New Year here.
One of the advantages of Mexico Beachfront Real Estate is the sea and all the activities and adventure it offers. At the beginning of May Ixtapa-Zihuatanejo hosted the 26th International Sailfish Tournament, which included marlins as well. Ixtapa is internationally recognized as one of the best destinations for sport fishing during this season Sailfish in the area can reach up to 175 pounds.
Almost immediately following the fishing tournament, the city hosted the 15th National Cheerleading Championship, organized by the Asociacion Nacional de Porristas (National Cheerleading Association). The event welcomed more than 1000 participants from universities throughout the country. The Association is recognized on an international level, having participated in competitions such asThe United States All Star Federation ,The International All Star Federation ,The International All Star Federation for cheer and dance teams and theAustralian All Star Cheerleading Federation Likewise the competition was judged by an international panel.
Last year, from September 18th to 21st, Ixtapa-Zihuatanejo also hosted the Latin-American Surfing Tournament, a six-star competition (the highest possible category in surfing championships), and the most important competition of its type in Latin America. This was made possible by the logistic support, planning and organization of various local and national organizations, and by the ideal conditions in Ixtapa-Zihuatanejo. The city welcomed more than 100 participants from various countries including Costa Rica, Colombia, Peru, Mexico, Argentina, Panama, Venezuela, the Dominican Republic and Puerto Rico. The competition took place onEl Palmar beach in Ixtapa, one of the most ideal places for surfing not only in Mexico but also in the world.
“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!”
Thomas Lloyd, graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. Mexico Real Estate Degree & Professional Identificacion Number S.E.P. #5978657. He is the current president of TOPmexicorealestate
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
Anything is possible. See how this young man manifested the home of his dreams with ONE RED PAPER CLIP!
… a beautiful day for a neighbor. Would you be mine? I love San Diego, even in the fall – when the weather CAN get cooler. But come on, how spoiled are we really? It’s beautiful here 24/7/365 – and I wanted to remind us all that we’ve got it made. It’s a beautiful day [...]
Nothing is worse than getting into a fender bender. Unfortunately, it happens. But don’t worry~Santee has one of the finest shops in East County to have your car back on the road in no time! Carter Collision prides 
themselves in making your car just as good as new in the least amount of time. Located next to the Sheriff’s Station on Cuyamaca, Carter Collision is easy to find.
Carter Collision hires only I-CAR Certified Collision Specialists which ensures you are getting a trained collision repair mechanic. From mechanical and structural to 
estimatng, the I-Car Certified Technician can work on getting your car back on the road.
As the “preferred” collision repair shop for most major insurance companies, Carter Collision help make your experience as comfortable as possible in an unfortunate situation. Carter Collision has partnered with Clancy’s Towing to get your car there and have rental cars available on site.
Pride of workmanship is felt the minute you walk through the door. The clean work environment, state-of the-art equipment and friendly staff will put your mind at ease. You will receive phenomenal customer service and the staff will explain to you what will happen with 
your vehicle. You will understand the process in lay men’s terms and feel confident your car will be taken care of. The Dupont Corporation has designated Carter Collision as an “Assurance of Quality” facility. Any repairs completed by Carter Collision come with a lifetime warranty for as long as you own your vehicle.
Hopefully you will not need their services anywhere in the near future, but if you do, remember Carter Collision for your collision repair needs. With a warranty and service like that, you won’t ant to trust anyone else. Visit Carter Collision on the web or 619-258-2050.
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
Continuing withhis great information, Thomas Lloyd provides some great information that will assist you in making your purchase of real estate in Mexico a little easier. Here is some great advice regarding agent requirements (or lack there of) and how to protect yourself.
What you need to know before making important decisions about Mexico Real Estate.
Did you know that real estate licensing in Mexico is not mandatory That anyone can sell real estate without having to go through training specific to the field There just recently became available a program to obtain a Mexico real estate professional degree and license but again, this is not mandatory. Yes, unfortunately this is all true. So how can you, as a consumer, protect yourself in such an unregulated market
Even though the field is not yet regulated, there is an association that was established to ensure good business ethics among its members. This association is called A.M.P.I (The Mexican Association of Real Estate Professionals) A.M.P.I. National was founded in 1956 in Mexico City with the intention to raise the technical level of the profession and establish codes of ethical business practice. This group is diligently pursuing the matter of licensing as well as ongoing training requirements for the real estate field.
This group has been striving towards a higher level of professionalism and has been recognized by NAR (National Association of Realtors) in the USA. Because of their high standards of ethics, A.M.P.I. members are now recognized as NAR International Affiliate Members. A.M.P.I. is also a member of ICREA (International Consortium of Real Estate Association) an alliance of leading national real estate organizations in the world s major marketplaces.
The constant pursuit for professionalism in the real estate field, has led to the development of courses that members can now take and one day such courses will be a requirement to receive the real estate license. For example, this year in the Cancun real estate region, the A.M.P.I. organization will sponsor a six day course for C.I.P.S (Certified International Property Specialist) as part of the ongoing training for members.
As professional Mexico brokers and agents in the market place, we get to see first hand some of the questionable practices of unprofessional independent orpart time brokers and it is frightening to see the risk unsuspecting consumers are exposed to. Many foreign consumers are unaware that the real estate profession is not regulated. You should always investigate the background of a broker before entrusting them with your business. Beware, some brokers may use the A.M.P.I. logo without being a member of the association. Some may even use the REALTOR logo if they were a licensed broker in the US, but they may not be a member of A.M.P.I. Selling real estate in the U.S. is very different from here in Mexico, so being a REALTOR is not really of great benefit for the consumer.
In hot real estate markets in Mexico, such as Cancun and the Riviera Maya, it is common to find waiters, taxi drivers, etc. moonlighting in real estate to try their luck at making a hefty real estate commission. These part timers may not have bad intentions but their lack of experience could result in a costly mistake for you.
There are still some horror stories from buyers of pre-construction developments throughout Mexico. In many of these situations, the buyer bought directly from the developer. Many consumers think that if they buy direct and avoid a broker, they will get a bigger discount. Unfortunately, that is not the case. There is always a commission paid. If there is no broker, then the commission is paid to the in-house sales staff that works directly for the developer and represent his interests. Without your broker, there is no one looking out for your interests. It is especially important in the current market to always have a knowledgeable broker, one who can recommend developments that are safe for investment. There are so many new pre-construction Mexico condo projects on the market which creates the possibility that some of them will not complete construction. Your broker will know the factors that are important in determining the risk involved based on the developers track record, marketability of the project, guarantees to the buyer and market conditions that affect sales.
Since the boom of foreign buyers in the last few years, professional brokers have realized that the way to do business is by transparent transactions. Many have realized that we have to adjust the Mexico purchasing process to one that the foreign buyer understands and gives them the greatest protection.
It is unfortunate for both buyers and professional brokers, that many brokers in Mexico still have not adopted transparent business practices. This not only puts the consumer at risk but stories of fraud and deception always come back to haunt the real estate field. Thankfully, A.M.P.I. continues to push forward to find ways to better protect and educate consumers to ensure the safety of their investments.
There are fewer fraudulent sales every year, but they still happen. Buying real estate is one of the biggest investments you will ever make. To make sure you are working with an A.M.P.I. professional go to http://www.ampi.org/ Don t be afraid to ask for references and do check them.
“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!”
Thomas Lloyd, graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. Mexico Real Estate Degree & Professional Identificacion Number S.E.P. #5978657. He is the current president of TOPmexicorealestatet
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
“Man often becomes what he believes himself to be. If I keep on saying to myself that I cannot do a certain thing, it is possible that I may end by really becoming incapable of doing it. On the contrary, if I have the belief that I can do it, I shall surely acquire the capacity to do it even if I may not have it at the beginning.”~Mahatma Gandhi
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
MMMMMM! Apple, cinnamon, pine…..the smells of the season are in the air! Love the smell but hate the mess? I have the solution for you!
Local crafter Lori Fortune brings to you Lori’s Gatherings. Lori makes potpourri, scented oils and room 
sprays. Lori mixes her own blend of oil, rose hips and dehydrated nuts and fruits to bring you some scents that last the holiday season and beyond!
Are you looking for a unique gift for clients or for your friends that have everything? Lori’s Gatherings puts together some beautiful gift baskets of the best smelling, longest lasting potpourri I have ever purchased. Not only does Lori’s Gatherings offer some fantastic Holiday scents, she also makes year long scents like Welcome Home and Rustic Orange.
This potpourri is made with Rose hips which retain the scent of the oils used better than any other potpourri mixture. She adds her unique blends of scented oils, dehydrated fruits (based on the potpourriscent) and viola! A fantastic smelling home year ’round! This potpourri can also be simmered on the stove. Put some scented oil in your diffuser and your home will smell wonderful!
This potpourri never goes bad. Add some refresher oil, stir it up and back to the beautiful smell as if you had just purchased it. This really does make a fantastic gift. Add some of her handmade room spray to your gift and you are on your way!
Lori’s Gatherings is a local business and her potpourri can be found at the Applecrate as well by contacting Lori directly! Put together a gift basket today!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
One of the things you must obtain when purchasing a home is Property Insurance. It is a requirement of your lender the property be insured in case of a loss. Unless you are paying cash for a home, there is no way to avoid having property insurance. Even if you are paying cash, the benefits of property insurance far outweigh the cost.
Understanding what property insurance is and the types of things covered are important when looking at policies. The typical perils property insurance covers are:
These items are often stated in the policy as “sudden or accidental”. So if your roof collapses due to age or disrepair versus storm damage, it may not be covered. It is good to discuss with the insurance agent what type of damages are covered as well as cause of damage. Items that are not typically covered under a standard homeowners policy are:
When reviewing the options for property insurance, it is important to understand the difference between Actual Cash Value(ACV) and Replacement Cost Coverage(RCC). Most lenders will require you to carry replacement cost coverage in the amount to cover the loan amount. An example of ACV versus RCC would be if the house were to burn down and need to be completely rebuilt, ACV would only cover the cost for the value at the time of the damage, where RCC would cover the actual cost to rebuild (less your deductible).
Since you may not have ever purchased property insurance before, or you are reviewing your policy coverages, there are some things that you may want to remember to ask the insurance agent about.
Sounds more and more expensive by the minute doesn’t it? But each of these items are so important in the event of loss. Some items that may help you lower your premiums may be:
The numbers of ways property insurance is important for you in owning a home are really worth the premiums you pay. 
Think of all the homes that have been completely rebuilt after the San Diego wildfires. But those without satisfactory coverage suffered the losses. You want your home and possessions to be back to the way there were prior to the loss. Don’t cut corners.
Be sure and shop around when looking to purchase your property insurance. Buy a policy from a reputable company so you are assured if you do have a claim, it will be paid! Be wary of the no name, low rate company, often times if it sounds too good to be true, it may be!
I hope this has shed some light on shopping for your property insurance and has given you an understanding of the types of things that are and are not covered. If you have any questions or would like an agent referral, please feel free to contact me!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
There is so much to learn about purchasing real estate in Mexico. Thanks to Thomas Lloyd for sharing his knowledge with us!
The Mexico real estate market has gone through various changes over the last several years Title insurance, escrow accounts, and financing are new options and tools now available to help the non-Mexican acquire La Paz real estate properties and even properties throughout various regions of Mexico.
Until recently, most Mexico homes and condominiums were for sale for all cash or financed by the seller With the advent of NAFTA however, several mortgage companies have entered the Los Cabos and Cancun real estate marketplaces and offer long-term financing for qualified buyers If you are considering financing your purchase, and are buying in a location where financing is offered, it makes sense to investigate the terms and plans available, select the company of your choice and make lender approval a condition for the purchase
If the seller will be financing your purchase, request that title be transferred to you and a pledge guarantee contract executed guaranteeing payment Traditionally, sellers have preferred to hold title to the rights in their name and transfer title to the rights only upon receipt of payment in full from the buyer Meanwhile, however, the seller may die, may disappear, may go bankrupt… a risky situation for the buyer The prudent buyer will insist upon a transfer of title and registration of a mortgage or pledge in which he gives his rights in the property as security for payment of the remaining purchase price In the event of default by the buyer, the seller must conduct a proceeding similar to a judicial foreclosure in the United States and Canada It is troublesome, as is any foreclosure in any country in the world but not notably more problematical The registered title and recorded pledge or mortgage provide the buyer a greater comfort level in his investment The lender also enjoys protection in having his loan recorded and will have an established legal proceeding to follow in the event of default by the buyer
“Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!”
Thomas Lloyd, graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. Mexico Real Estate Degree & Professional Identificacion Number S.E.P. #5978657. He is the current president of TOPmexicorealestate
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
If you are considering buying a home in the near future and need to use an FHA loan, please see Ken Cooks article below to understand some of the potential changes FHA may experience in the near future. Any one of these items may affect your home buying ability.
We are all doing our best to voice our opinions to help keep the guidelines as they are today. Thank you Ken!
For many years home mortgage insured by the Federal Housing Administration (FHA) have made home ownership possible for millions of home owners. During the “boom” FHA loans lost a lot of ground in the marketplace because non-conforming loans were often easier to get and cost the borrower less scrutiny and often less out of pocket. (More on Examiner.com from my article this morning.)
Welcome the day when Housing and Urban Development Secretary (HUD) Shaun Donovan stood in front of Congress and reported the reserves of the FHA insurance pool to be only .53% – far below the federally mandated, by law, 2% reserves. As you may imagine Mr. Donovan, in an effort to save his job, is now scrambling for good ideas to get those reserves back to the minimum legal level. Let us all observe as the fireman tries to put out a big fire while his own pants are on fire.
Here are some of the recommendations thus far:
- Raise the required minimum down payment from 3.5% to 5%
- Lower the maximum seller contribution from 6% to 3%
- Establish a required minimum credit score
- Eliminate the ability to finance the Up Front Mortgage Insurance Premium (UFMIP) into the loan
- Raise the cost of FHA mortgage insurance (higher premiums)
Currently it is much more difficult to be approved for a home loan, purchase or refinance, than it was two years ago or even six months ago. Mortgage brokers are not dropping like flies they have already dropped like flies and the remaining small percentage are having great difficulty getting loans underwritten and closed when they involve lower credit, lower income borrowers. Mid-level lenders are now the ones who are disappearing as they still lose warehouse lines of credit at an astonishing rate. This week saw the demise of LendAmerica.Judging from the applications I have accepted and closed over the last few months these changes will absolutely impact at least 25% of the borrowers who have successfully purchased or refinanced their homes in the last few months. In fact I have two borrowers today who easily qualify who will likely not qualify if these changes are made. Considering I’m one out of tens of thousands go ahead and do the math.Just wait … it’s not only FHA – it’s Fannie, then Freddie and Ginnie. We predicted it a few months ago that it would not be long until buyers would need a minimum of 5% down, a minimum of a 640 credit score and rates would start to rise.Are you ready to pay attention even if you don’t get CEs for participating in the conference calls? If I were an agent I would be – I would want to be ahead of the curve!Ken Cook – Georgia – FHA, USDA, VA and Conventional Home Loans (678) 439-8683
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
Are you looking for a way to give back this season? ‘Tis the time for giving! Santee Santas is a local program which is an all volunteer organization that helps local families with food, toys and monetary assistance this holiday season.
It has been a rough year for many people in the community and the Santee Santas will be collecting toys and food, as well as accepting cash donations. Food donations can be taken to any Santee School, and many of the local Santee businesses will have food donation boxes as well. New toy donations will be accepted at either of the Santee Fire Stations. You may also find toy donation boxes at local Santee businesses. Monetary donations can be made by mailing your donation to Santee Santas Foundation P.O. Box 710033 Santee, CA 92072-0033. Santee Santas are supported solely by community contributions which means no administrative costs. 100% of your donation will go directly to those in need this holiday season. Your gift is also tax deductible.
Not able to afford a toy or monetary donation? You can also volunteer your time to help sort food, wrap toys and deliver food and toys on delivery day! If you can volunteer, you can reach the Santee Santas at 619-258-5947 or visit them on the web at Santee Santas!
This is the 57th year for Santee Santas, and last year they helped 176 families and 356 children! This is a fantastic opportunity to give back to our great community! Hope to see you there!
Making the Home of Your Dreams A Reality. As your Agent of Possibibility it is my intent to make your home buying or selling process a smooth one!
Please feel free to subscribe to my blog or contact me at 619-838-4408.
Stephanie Reynolds 
Colleen Mitchell 
