July 28, 2009-(MCT)-First-time homebuyers and those thinking about
refinancing are in a great place.
Mortgage rates just fell for the third straight week, according to mortgage
finance firm Freddie Mac.
“The credit markets are still tight, but they have loosened up significantly
from 90 days ago,” said Scott Norman, vice president of the Texas Mortgage
Bankers Association.
So is this a good time to enter a mortgage transaction? It might be, if you
can qualify. “The two biggest issues are going to be credit and down payment,”
Norman said. “Those are really going to trigger your ability to get a mortgage
in a decent amount of time.”
Here’s what you’re up against in specific mortgage situations and what you
can do to increase your chances of getting a deal done.
If you’re buying a home
Get ready for paperwork. Have
your bank statements, W-2 wage and tax statement and pay stubs organized.
Having all the paperwork upfront will speed the application process.
Check your credit score. The most widely used score is the FICO, which ranges
from 300 to 850. Your score, based on information in your credit report, helps
lenders predict how likely you are to make your payments on time. The higher the
number, the better the chance you’ll be approved for a loan at a low interest
rate. “Clean up your credit score,” Norman said. Catch up on any late payments
and pay off or pay down your debt.
First-time buyers have a sweetener in the form of an $8,000 credit on federal
income taxes for homes purchased before Dec. 1.
It’s critical that you have a down payment because lenders want to see that
you have skin in the game. Mortgages insured by the Federal Housing
Administration require a 3.5% down payment, which can come from a family member,
employer or charitable organization as a gift. For a non-FHA-insured loan,
lenders are requiring a 10% down payment, said real estate agent Brenda Rogers
of Coldwell Banker Apex, Realtors in Plano, Texas.
If you’re refinancing
“Have plenty of equity,” Rogers
said. Equity represents the ownership value you’ve accumulated over time by
making payments, and lenders want you to have a financial stake in the
refinancing. “The lender doesn’t want to lend 100 percent of the value of the
property,” said Norman, of the Texas Mortgage Bankers Association.
Another reason to build equity is that you don’t want to owe more on your
home than it’s worth, a situation some homeowners face today.
Also, consider how long you plan to remain in your home, because you need to
stay long enough to recoup closing costs associated with refinancing. Those
costs typically will total $3,000 to $5,000, said Davidson, of Service First
Mortgage. “If you’re going to move out of your home in five years or less, then
typically it’s not going to be worth your doing,” she said. “If you plan on
staying longer than that, then we need to look at the costs vs. the monthly
savings to see how long it will take to recoup that cost.”
Loan modificationsA loan modification is when a lender
changes the terms of your loan so you can afford your payments.
That can be done by lengthening the term of your loan, lowering your interest
rate or allowing you to skip payments and adding those to the end of your
loan.
The Obama administration is prodding mortgage-servicing companies to bolster
their efforts to modify troubled loans. The servicer is the company that
collects and processes your mortgage payment. It may or may not be your original
lender.
If you’re having trouble making your payment, contact your servicer
immediately and ask about a loan modification.
(c) 2009, The Dallas Morning News.
Distributed by McClatchy-Tribune
Information Services.
Valuable information provided by:
Liane Thomas, REALTOR(R), CA DRE#01704162
The Thomas Group, Keller Williams Realty
Serving Corona, Riverside, Norco, and surrounding communities
www.AllCoronaHomes.com
951.454.3805
