How does a Lender Calculate the Credit Worthiness

Your mortgage payment should be no more than one quarter of the household’s gross income.
Your debt ratio, meaning your our credit card bills, car loans, alimony and/or child support should not be more than about 30 to 40 percent of your gross income. So a client with 22/36 calculation would have great potential borrower. Of course then your income and FICO scores come into play.

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Some Advise For the First Time Buyer

When you are purchasing a home you will need anywhere from 3½% to 20% down, the lowest down payment being a Government FHA Loan. So what are the limits on such a loan?  The limit on a FHA Forward is $271,050.00.

Going on the assumption that your FICO score is at least 620, you will be able to qualify for a FHA loan that only requires a 3.5% down payment, so on $$271,050.00 mortgage loan you need $9485 down. When calculating your projected monthly payment, be sure and include what is called private mortgage insurance (PMI) until the principal becomes 80%. Another monthly expense is your property taxes and insurance.

This loan might cover less of a house than you were counting on, but it will keep you safe from payments you cannot afford and start you off on a good foundation of home ownership.

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Congress Passes Financial Reform Bill

There was a financial reform bill passed by Congress last week that is meant to protect the borrower from mortgage loan abuses. The ironic thing is that the offenders/lenders that this is geared toward no longer exist.

Listed below are just a few items in the contents of the Bill.
• Requires lenders to ensure borrowers have the ability to repay a home loan.
• Restricts prepayment penalties and the fees to brokers for steering borrowers to higher-priced loans.
• Mortgage applications will be simpler and easy to understand.
• Stricter requirements will apply to some types of mortgages—including negative amortization.
• The bill will limit points and fees to 3 percent of the total loan amount.
• Prepayment penalties are tightly controlled and end three years into the loan.
• And a new consumer protection agency will be established to spot and eliminate abuses of the home-lending business.

Someone is going to have to pay for the expenses occurred by the lender in meeting these new requirements, no doubt the cost will be passed down to the consumer.

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When Will the Real Estate Market Stabalize

This is an interesting fact: Nationally about 24%  of the homes on the market had a 1% drop in price compared to  15% of the homes dropping last month. The fact is that home prices were so high by 2006 , that it will take probably in my opinion till year 2015 to get some normalcy and back to a stable market.

 Terrie Cox, PC, GRI, CRS, CDPE, ABR, e-Pro, CLHMS
#31 Agent in the USA (2010) Ranked as high as 89 in the World
 Re/Max Equity Group – Licensed Oregon & Washington

 Direct: 888-888-8284    Office: 360-699-5100  Fax: 360-699-6100

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Home Sales Rose Nationally 7.2 %

According to RE/MAX Monthly Housing Report, because of the U.S. Homebuyer Tax Credit of fall and again this spring, the home sales rose nationally 7.2 % in June over May. Although this volume will not continue, homes sales will remain higher than last year and prices are slightly increase. The median sales prices for June was $211, 530.

“There’s no question, the tax credit has had a significant impact on this market,” says RE/MAX CEO Margaret Kelly. “No one can predict the future, and we may still see a slight pull back, but for right now it appears that housing is holding its own, hopefully on the road to a sustainable recovery.”

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