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Home Buying Tips

admin — Wed, 02 Sep 2009 17:14:53 +0000

1) Start With Your Credit

If you’re in the market for a home, the first thing you need to do is assess your credit. Do you know what your FICO score is and how it affects the interest rates you get? It’s best if you can start with a house buying plan about 3 years out from when you actually intent to buy the house because this gives you more time to improve your credit. Credit repair is unfortunately a slow process but it’s worth putting in the effort because people with the best credit get the best loans. This doesn’t mean you won’t be eligible for a bad credit mortgage but it’s better to plan ahead.

2) Only Buy As Much House As You Can Afford

When people start looking at houses, they automatically look to buy their “dream” house. A better course of action is to get pre-approved for a loan and then only look at houses in your price range. Don’t even get tempted to look at houses outside your budget as then your expectations will start to rise and you’ll start to justify a more expensive home. Buying your “dream” home can quickly become a nightmare when you are house poor. House poor is a term that refers to people who spend too much on their homes and now have no extra money for emergencies, long term savings, or daily living expenses.

3) Don’t Buy Unless You Are Going To Live In The House For 5 Years Or More

This is especially good advice to follow in this current uncertain economic market. If you are unsure if you will able to live in the house you are buying for the next 5 years, then it is probably better to rent. When you factor in all the expenses of home ownership such as closing costs, moving expenses and basic home improvements, then renting is usually more cost effective in the short term. With the problems we’re currently facing in the US job markets; it may also be a good idea to remain flexible about relocating to pursue better employment opportunities.

4) Consider The School District

A lot of home buyers fail to consider the school district they’re buying in but it is a major factor in determining home values in an area. If two exact homes are for sale at the same price, you can bet the one in the better school district will sell first.

5) Get a Home Inspection Done

In most cases, an appraisal will be done by the bank so they know that the loan they’re giving is a good investment but you need to get a home inspection done as well. A home inspection should be done by a qualified inspector that the buyer hires himself. The inspector will examine the house and tell you what sort of problems you could have in the future, such as needing to replace a roof, possible basement flooding, or wall mold. It may cost you a few hundred dollars to get the house inspected, but it is one area where you don’t want to cut corners. In addition, you can try to get the inspection rebated by the seller or make the purchase agreement contingent on a positive home inspection.

5 Reason Why Renting May Be Better Than Buying

admin — Wed, 02 Sep 2009 16:34:04 +0000

1. More mobility. This is especially true in depressed market conditions like where experiencing right now. If you are living in a depressed market like Detroit and need to move to get a job, good luck selling or renting your house to recoup your losses. In a bad job market, flexibility is key.

2. Depreciation. With all the uncertainty in the housing market today it may be better to wait. It’s impossible to time the housing market so that you buy at the exact bottom and once the market does hit bottom, you’ll have plenty of time to buy so why rush in. It’s better to buy once things have stabilized and so far that doesn’t seem to have happened yet.

3. Owning a House is more Stressful. This may seem like a weird thing to consider but it’s simply true. Owning a home has a lot more responsibility tied to it than renting does, some people are up to the responsibility some people aren’t. If your house needs a new roof, you better come up with the cash. If your air conditioner breaks in the middle of summer, hope you have a couple extra grand sitting around. Who doesn’t love mowing the law? The responsibilities of home ownership are endless.

4. Liquidity. Right now as unemployment is rising, housing is falling and the economy is still in turmoil, cash is king. If you tie up your money in a house, this is money you may not have for an emergency job loss or forced move.

5. Neighborhood deterioration. This is generally related to both 1 and 2 above, if you have the misfortune to buy in an area where there are no longer any jobs, people move out and vacant/foreclosed houses abound. Even if you manage to keep your job and pay your mortgage, your house has lost value and so has your entire neighborhood. In some cases entire cities are losing value. No one wants to live where there is no opportunity and no perceived value even if housing is cheap.

Special FHA Loan Programs Available

admin — Wed, 05 Aug 2009 20:43:43 +0000

Good Neighbor Next Door

This program is only for pre K-12 teachers, firefighters, law enforcement, EMTs. These are people that are considered a valuable asset to the revitalization of neighborhoods so they are given special consideration. If you agree to live in the home for 3 years as your main residence, then you can qualify for a discount of 50% off a homes price. This program is only available in areas that are considered revitalization areas which in most cases are run down older areas of town that most likely have a higher crime rate. Even so, this is a great deal.

The way this program works is that the FHA has you sign a second mortgage for the 50% off amount and if you meet the three year agreement contract obligation then this mortgage is voided and you are not liable for it in anyway. They do have some very minor safeguards in place such as mailing a yearly letter to the property which the homeowner then has to return, if the letter isn’t returned then someone visits the house in person to make sure it is being used as a primary home. If you fail to comply with the Good Neighbor Next Door agreement then you may be financially responsible for the full price of the house which may be the least of your problems since criminal charges may also be filed against you.

Program for Public Housing Resident

In some instances, HUD may sell public housing to people who are HUD renters, to qualify for this program you need to contact your local Public Housing Authority (PHA). In most cases you need to enroll in the Homeownership Voucher Program which is a program to help low income people with mortgage payments and homeownership expenses. In order to qualify for the Homeownership Voucher Program you much meet minimum income requirement, must not have owned a home in the last 3 years, be employed (unless disabled), and go through some financial counseling classes. This program offers financial help with mortgage payments, utilities, maintenance and repairs.

Indian Home Loan Guarantee Program (Section 184)

This program is only available to members of a federally recognized Indian tribe or other native peoples such as Alaska’s Inuit population. It allows qualified individuals to apply for HUD assistance in obtaining financing to build homes both on and outside of Indian Reservations.

The goal of this FHA program is to help Native Americans become homeowners since they traditionally have been under represented minority. If you qualify for a section 184 loan, you could qualify for a loan for over $50,000 with as little as 2.25% down or 1.25% down for a loan of less than $50,000. You would not have to pay any mortgage insurance and the expenses of a loan guarantee which totals 1% of the loan amount can be bundled into the mortgage and paid out over the duration of the home loan. These loans can be obtained for buying an existing home, building a home, rehabbing a home, or refinancing a current home.

Neighborhood Gold Program

This FHA program helps buyers purchase homes with no money down. If the seller agrees to certain terms, the buyer could get 3% – 10% of the selling price for the down payment and other closing expenses. The seller has to pay 1% of the loan amount (up to $1,000) to take part in the Neighborhood Gold Program but this can be paid by the seller and then deducted from the cash grant. It’s necessary for the seller to agree to participate in this program so that must be worked out with the seller before any purchase offer is made.

In addition to the no money down offer, another benefit of this plan is that you are automatically enrolled in the Involuntary Unemployment Mortgage Program which gives you up to $1500 a month to pay your mortgage if you should lose your job involuntarily.

Access 2000 Loan Program (only available in CA and NV)

In order to qualify for this program you must meet the income requirements for the area you are buying in but you do not have to be a first time home buyer. This program is designed to allow people to buy houses with no money down and doesn’t require the seller to be involved. The way it works is that the buyer is allowed to get a first mortgage with an FHA loan for 103% of the homes value then Access 2000 gives the buyer a second mortgage for 6% of the homes price. The 6% provided by Access 2000 is used as the down payment and the extra 3% in the loan for home pays for the closing costs. The amount of the overall loan is determined by the county you are buying in, but the loan limits only go up to $239,250.