CAN I GET A LOAN AFTER FORECLOSURE?
CAN I GET A LOAN AFTER FORECLOSURE?
More than four million homes have been lost to foreclosure since the housing market started its decline. Unfortunately, experts expect many more in the coming years.
When the decline started most of us were not prepared, especially the banks. Mistakes were made and many people were hurt. Sadly, other than filing for bankruptcy protection, nothing wrecks a borrower’s chances of qualifying for a home loan like a foreclosure.
Fortunately, those distressed homeowners who obtained an approved short sale will fare much better.
Lender’s loan guidelines forbid most lenders from making loans to borrowers with a bankruptcy or foreclosure on their credit record from between two and seven years. Naturally, the circumstances for each foreclosure are different. Those circumstances will affect the borrower’s eligibility accordingly. Those who were able to maintain, or regain their income levels to the point of remaining current with payments for all obligations other than the mortgage will qualify sooner than will borrowers who were unable to make any of their payments. Employment history is also an important factor. The longer a borrower is employed at one company, on in the same line of work, the better. A two-year, uninterrupted employment period, is an absolute minimum.
Do not expect to qualify for the most competitive interest rates. Lenders will consider your loan a higher risk and will want a higher yield on their investment to compensate.
The selection of a lender for the new loan will also influence the required wait time. Government-backed loan programs require a borrower to wait a minimum of three years before loan approval. Some portfolio lenders, lenders who do not sell their loans and service them for the duration of the loan, can have shorter wait-time requirements.
The best course of action is to select a loan consultant with whom they feel comfortable dealing, explain the specifics of their situation, and allow their consultant to try to find a lender who will approve and fund a loan. You may learn that you have to wait a little longer. If so, you can use the time to improve your credit record and put some cash aside for the down payment and closing costs. Although waiting may not be something you want to do, you may end up better off as a result.
Select this link for a Mercury News article on this subject:
http://www.mercurynews.com/business/ci_20241918/past-foreclosure-means-waiting-years-new-loan
If you would like your specific situation with a licensed Mortgage Loan Originator in confidence, contact us at (916) 337-0658 or e-mail: Mike@BuyYourVilla.com
MORTGAGE RATES ARE MOVING BACK UP
MORTGAGE RATES ARE MOVING BACK UP
Have you waited too long? 
We have been advising potential buyers for months that housing prices and interest rates are so low that it is time to take the plunge. The present housing market is one that we are not likely to see again in our lifetime. Some have decided to follow our advice while others have not.
Some tell themselves that they are waiting for the bottom of the market. The problem is that the only way to know when we hit the bottom is when we look back at the data for several months so that we can identify when it happened. Hindsight is always 20/20.
We cracked our crystal, so we are not very good at predicting the future. What we can tell you is that mortgage interest rates are on the way up. The average rate for a 30-year fixed-rate mortgage is back above 4% now and the pundits tell us that they are destined to keep going up through 2012 and 2013.
You may not be aware of the fact that a few decades ago people were paying as much as 17%! The low 4% range is still EXCELLENT.
Fortunately, rates are not skyrocketing, so there is still time to act. Of course, the longer you wait the higher rates are going to be.
The current market conditions are also ideal for those with sufficient equity to refinance and lower their monthly mortgage payments. The key factor is the amount of equity an owner has in their property. Anyone with a 25% equity interest in his or her home that is paying 6% or above is just GIVING money to their lien holder. How do you like making investors richer?
Granted, lenders are more particular about whom they loan money to in our current market. The days of the fast and furious lending spree with “Liars Loans” and negative amortization loans have gone the way of the Klondike Gold Rush. However, the award goes to the persistent. They will look back on these good old days, when you could get a mortgage loan for 4%!
Select this link for a recent Wall Street Journal article on this subject:
THIS IS THE BOTTOM OF THE HOUSING MARKET
THIS IS THE BOTTOM OF THE HOUSING MARKET
After years of uncertainty and continued declines in home values, we have arrived! This IS THE BOTTOM OF THE HOUSING MARKET!
Forget what the talking heads are saying on television. Look at the financial press. Story, after story is being published that confirms that we are at the bottom. There will not be another opportunity like this in our lifetime.
During a recent CNBC interview with Donald Trump, he said, “When people come up to me and say, ‘What should I do, Mr. Trump?’ “I say go buy a house.”
Warren Buffet declared that if he had a way to manage them, he would buy a couple of hundred thousand single-family homes and rent them out. Even the famously conservative Robert Shiller, known for the Shiller Report, said that, “it wouldn’t be an obvious mistake to buy a house now.”
Bank of America/Merrill Lynch forecast that housing prices would fall 3.5% in 2012. They just revised that forecast made in November and they now think that prices will increase .5%!
Other current stories advise that in 98 out of the top 100 housing markets in the country, it is cheaper to buy than it is to rent. San Francisco and Hawaii were the notable exceptions.
Make no mistake, no one is saying that home prices are going to increase ten or twenty percent in the next hear. The recovery will be slow. However, predictions are that home prices will have recovered 42% by 2020. So, homeowners will be able to take advantage of home value appreciation once again.
Granted, it is more difficult to qualify for a mortgage in 2012. Lenders are much more cautious than they were in the years of the housing boom. Fortunately, there are indications that they are starting to loosen their guidelines so that more people may qualify. After all, they are in the business of lending money and if they hold too tightly on the reigns, they won’t have any business.
The prudent homebuyer should be paying down their existing debt and putting a little cash away for a down payment in an effort to run the gauntlet of loan qualification.
Ten years from now, those who bought in 2012, will be looking back and congratulating themselves on the smart move they made, buying at the bottom of the market. Will you be one of them?
Here is a link to the U.S.A. Today article about home prices:
Here is a link to the Wall Street Journal article by Alexandra Scaggs:
If you are thinking of taking advantage of this housing market, and wish to get professional assistance, contact us at (916) 337-0658 or e-mail Mike West at Mike@BuyYourVilla.com.
BofA TO REDUCE LOAN PRINCIPAL FOR 200,000 HOMEOWNERS!
BofA TO REDUCE LOAN PRINCIPAL FOR 200,000 HOMEOWNERS!
We’re not in Kansas any more Toto–there has just been a paradigm shift in the nation’s mortgage loan industry. Bank of America just announced that it is reducing the principal balance of existing mortgage loans for as many as 200,000 underwater homeowners!
Several days ago, we wrote a post about the $ 25,000,000,000 foreclosure settlement between the government and the five largest loan servicers. Bank Of America was one of them. Apparently, B of A made a side deal committing $ 1,000,000,000 to reduce loan principal for borrowers.
B of A estimates an average reduction of more than $ 100,000! The goal is to change the financial situation for these homeowners, so that they are no longer underwater.
This is quite a public relations splash. Unfortunately, the billion-dollar sum mentioned is only nineteen billion short of the total required to meet the stated commitment. I guess we can’t expect bankers to do the math correctly!
Of course, this is not a purely philanthropic exercise. The actual goal is to reduce the $3.25 billion in penalties B of A faces from the foreclosure settlement.
Distressed homeowners may be eligible if B of A is their loan servicer and they must be at least 60 days late on their mortgages as of January 31.
Only loans owned by B of A or private investors are eligible. They include loans originated by Countrywide and Calabasas, both acquired by B of A in the past several years.
Loans owned or backed by Fannie Mae, Freddie Mac, the FHA or VA are not eligible. This segment covers the majority of loans.
B of A has three years to complete these principal reductions and avoid the government-imposed penalties.
We hope that this program actually helps many homeowners. It is amazing what happens when the government applies a little heat.
To view the complete New Your Times article, select this link:
If you know someone in the greater Sacramento area who is facing foreclosure and needs assistance, have them contact us at (916) 337-0658 or e-mail Mike@BuyYourVilla.com
We are here to help!
HIDDEN MORTGAGE FEE TO INCREASE SOON!
HIDDEN MORTGAGE FEE TO INCREASE SOON!
When you go into one of the major banks to get a home, loan chances are good that they will sell your loan on the secondary market soon after loan origination. Odds are that you not write many payment checks to the originating bank. They take that cash and use it to originate more loans.
Fannie Mae and Freddie Mac, the two huge Government Sponsored Enterprises, purchase most of these loans and sell them to investors. The originating banks follow Fannie Mae and Freddie Mac loan guidelines to ensure that there will be no problem selling the loans.
When the loan originator quotes you an interest rate for your loan, that interest rate made up of three segments. The largest goes to the investors who buy the loan; a smaller portion goes to the loan servicer who maintains borrower contact, collects the monthly payments and handles loans in default; and the final portion is the guarantee fee. Fannie Mae and Freddie Mac charge a guarantee fee as a form of insurance against default for the loans that they acquire and resell to investors. The fee is also a primary source of revenue for Fannie and Freddy.
On April 1, 2012, that guarantee fee will increase 10 basis points, or one percent. The increase in the guarantee fee is to cover some of the costs or the two-month extension of the payroll tax reduction last December.
The increase in the guarantee fee will result in an increase in the interest rate that loan originators will charge after April 1.
There is one way to avoid paying this guarantee fee and the associated higher interest rate on loans originated in April and beyond. You can apply to a loan originator who does not sell their loans on the secondary market.
At the beginning of this post, we stated that most loans are sold on that secondary market. There is a smaller segment of loans are known as portfolio loans. They are loans that the originators keep and service themselves. Credit unions and community banks are usually portfolio lenders. Since they do not have to meet Fannie Mae and Freddie Mac guidelines, the lenders may be more flexible with their loan guidelines and are an excellent source for financing for borrowers.
To view the complete New Your Times article, select this link:
If you have any questions about real estate financing call us at (916) 337-0658 or e-mail Mike@BuyYourVilla.com