4 WAYS TO AVOID REFINANCE REJECTION
4 WAYS TO AVOID REFINANCE REJECTION
Obtaining a new real estate loan is more difficult than ever. Banks, investors and the government have changed their tune since the high flying, no holds barred financing frenzy of the first six or seven years of this century.
In the current market, you actually have to have an income and assets and you have to produce concrete proof of their existence. The days of the NINA loan (No Income, No Asset–the borrower with a decent credit score did not have to produce proof of an income or of any assets to get a loan) are gone forever. The pendulum has returned past center and is now at the other end of its swing.
Naturally, now that loans are more difficult to get the market has adjusted to the much lower volume with lower interest rates. However, underwriting guidelines are as tight as a drumhead and only the most qualified are approved. Some of you may remember the old line often used in the movies from the 1930s, “you can’t get a loan from a bank unless you can prove to them that you don’t need the money.”
Lenders are looking for borrowers with credit scores in the 700s, the higher in the 700s the better. Many want a buyer to put 25% down, not the 20% that they have required for decades.
So how, you may ask, is a homeowner paying a high interest rate going to qualify for a refinance loan in this market? Unfortunately, unless that homeowner’s circumstances meet the stiff underwriter guidelines, they can’t. A good loan consultant will be able to determine if their situation may result in a loan approval before the lengthy process begins.
If the lender rejects your application, what can you do? The answer is; it depends on your situation. The first thing to do is consult with your loan consultant and make sure that you understand the reasons for the denial.
Shop Around: You may be able to apply to another lender. Although the primary guidelines are the same with almost all lenders, there may be some slight differences. Some commercial banks and credit unions service their own loans and can be more forgiving about certain issues than will be the large banks who sell their loans on the secondary market.
Low Credit Score: Credit reports are notorious for their inaccuracy. If there are errors on your credit score that have a negative impact on your score, you can get them corrected in a little over a month. You can also work with a loan consultant to fix some of the other problems listed on your credit report, but that can take much longer. Paying down credit card and other loan balances usually helps.
Equity Too Low: This is a common problem today. The market value on almost everyone’s home is down. It is difficult to get an appraisal for a higher value and appraisals cost $ 350 or more in most instances. If you have access to funds, you could do a cash-in mortgage, in which you contribute more cash to increase your equity position, making a refinance more acceptable to a lender.
Debt-to-income ration to high: Lenders do not want a borrower’s debt service to exceed around 40%, that means not only housing costs, but monthly payments on credit cards, store cards, auto loans, student loans, alimony and child support as a percentage of your gross (before taxes) monthly income. The government wants that ratio below 31%.
Paying down account balances is the only way to improve this ratio. One must also stop adding to those accounts to maintain an acceptable level.
Jack Guttentag of Inman News has written an excellent article on this subject. Select this link to access that article:
http://lowes/inman.com/newsletter/2011/11/09/news/161188
40 Percent of Metro Areas To See Price Increases In 2011
According to a recent real-estate market forecast from Veros Real Estate Solutions, 40 percent of major metropolitan areas will see appreciation in home prices over the next year. Veros looked at the median price tier in cities of 500,000 or more and expects a 2.5-to-3.5 percent increase in values between December 2010 and December 2011 in select markets. Eric Fox, Veros’ vice president of statistical and economic modeling, said, though things aren’t happening quickly, they are getting better and, even in depreciating areas, the forecast remains much better than those from a year ago. More here and here.
El Dorado Hills and Folsom are included in the Metro Area under discussion.
50% OFF ON HOMES FOR SALE—NO SCAM!
50% OFF ON HOMES FOR SALE—NO SCAM!
We are inundated with marketing material promising that if we only buy X product we will lose weight, develop Schwarzenegger-like bodies or grow hair where none has grown for decades. Naturally, we tune out and go about our daily activities.
However, for the very narrowly defined guidelines, the U.S. Department of Housing and Urban Development has a program that allows those qualified to buy homes for 50% off the asking price. In many cases, qualified buyers can also obtain FHA financing on their purchase and may only have to put a $ 100 down payment!
Now, you ask, what is the catch?
- It is simple; to qualify the buyer must be a first responder (Law enforcement officer, fire fighter, emergency medical technician) or a teacher.
- They must be employed in the qualifying position full time
- They can not have owned a home for the past twelve months
- The property MUST be their only residence
- They have to agree to live in the property for at least three years
- Only specific HUD homes qualify
A HUD home is one in which the previous owner had an FHA guaranteed loan. That borrower defaulted on the loan and the lien holder foreclosed on the property. (Once the lien holder completed the foreclosure process they have the option to sell the property as an REO-bank owned home–or they can transfer the deed to the Secretary of Housing and Urban Development in exchange for the FHA insurance coverage.) Once HUD has title, they market the home as a HUD home. http://www.Hudhomestore.com
Those homes located in areas that HUD determines are eligible qualify for the Good Neighbor Next Door Program. Those are the homes available to qualified buyers at 50% off the asking price!
The qualifications are very narrowly defined and the homes may need some work. However, if you can buy a $ 200,000 home for $ 100,000 with only $ 100 down, there is little room to complain.
Note that not all Realtors are qualified to represent buyers in the purchase of a HUD home. Naturally, we are. So, if you, a family member or friend are qualified for this program, give us a call. We will be happy to help you find properties that qualify and represent you in their purchase.
9 DEADLY MISTAKES HOME SELLERS MAKE – #6
DEADLY MISTAKES HOME SELLERS MAKE – #6
Selling the most expensive asset that most families own is serious business, not something to be taken lightly. It can be a highly stressful process and costly mistakes are easy to make. In order to net the most from the sale it takes careful planning and some work on the seller’s part.
Based on our years of first-hand experience, we have compiled a list of the 9 Deadly Mistakes Home Sellers Make to help home sellers avoid them. As the old proverb says, “forewarned is forearmed.”
A copy of the list is available at no charge to anyone who requests one by
e-mail. Send you request to: Mike@BuyYourVilla.com 
DEADLY MISTAKE #6 –
Thinking you need to be in the home to explain things to a prospective buyer.
Many sellers are concerned that prospective buyers may miss some of the most important features that their home has to offer. Their tendency is to meet the prospective buyer at the front door and hover around them, pointing out every little feature: DON’T!
Let their Realtor, or YOUR Realtor handle that. Almost every buyer wants a little space when they are looking at homes. They feel much more comfortable if they can speak their mind to a real estate professional. They tend to close down, walk through the home quickly and get out as fast as they can when the sellers are present.
They may be impressed that you home has a built in ironing board or a Lazy Susan turntable under the corner kitchen cabinet and they may not care. Every individual has their own priorities. Buyers can usually tell within a few minutes if the feel of the home and its setting will work for them. The home’s features are secondary. If the overall feeling is right form them they will then be interested in the features.
If you have a showing scheduled make sure things are straightened out, turn on the lights, open the window coverings, put on some soft music and LEAVE.
If people come to your door asking to see the home, don’t let them in. Refer them to your Realtor for a showing. You do NOT want unscreened individuals in your home. They may come back when you are not home with a truck and clean you out! Just say, “for security reasons my Realtor requires that all prospective buyers be accompanied by a licensed Realtor when viewing our home. His/her name is —- and his/her phone number is 123-0987.”
It is better to be safe than sorry.
It makes no difference if you are in El Dorado Hills, Folsom, Cameron Park or any other city or town in California, or in any other state. The same rules apply.
If you have any questions or want to put your home on the market call a REALTOR today: (916) 337-0658. You will get a no-cost market evaluation and suggestions on how best to maximize your selling net!
9 DEADLY MISTAKES HOME SELLERS MAKE – #7
DEADLY MISTAKES HOME SELLERS MAKE – #7
Selling the most expensive asset that most families own is serious business, not something to be taken lightly. It can be a highly stressful process and costly mistakes are easy to make. In order to net the most from the sale it takes careful planning and some work on the seller’s part.
Based on our years of first-hand experience, we have compiled a list of the 9 Deadly Mistakes Home Sellers Make to help home sellers avoid them. As the old proverb says, “forewarned is forearmed.”
A copy of the list is available at no charge to anyone who requests one by e-mail. Send your request to: Mike@SellYourVilla.com
DEADLY MISTAKE #7 –
Not knowing how to price your home to sell.
For most homeowners, this is probably the most difficult part of the selling process. The key to selling a home, or anything else, is to price it properly. Any home, even one in terrible condition, will sell if a buyer perceives that there is value in the price that they are paying. This is one of several areas where the assistance of a skilled Realtor can pay dividends.
One thing to keep in mind is that a raising, or falling, tide floats all boats. It makes little difference at which stage the market is when you make a decision to sell. If you have to take a hit on price when you sell the seller of the home 
that you intend to buy will have to take that same hit. If you rake in a nice profit when you sell your home, you are going to have to pay a high price on the home that you buy.
Over the past few years market prices have declined. It is difficult for many homeowners to accept the drop in the actual market value of their home. Too may have their hearts and minds tied up in 2005 pricing (the height of the market). Sellers frequently do not take the time to look at their competition when considering pricing their home. They do not look at it from the buyer’s side. Most buyers look at anywhere from five to fifty homes before they find the one they want. Before they make that offer, they have a good idea what the market values are. Their agent will do a market analysis for them before they make a decision, making them even better prepared. If your asking price is too high they won’t bother making an offer because they will be confident that you are not in tune with current market prices and will not be willing to negotiate.
Some sellers want to start high, thinking that they can always drop their price if they don’t get any offers. This is flawed thinking. The will have lost many opportunities because buyers will pass their home up in favor of well priced homes. Once your listing becomes “stale,” buyer interest wanes. Price reductions, chasing the market down usually end up with a no sale situation.
Pricing a home too low is also a bad idea, unless you can create a buyer bidding situation in which the winning bed is well above your original asking price. This is difficult to accomplish and usually works out very well for the seller when it happens. The danger is that if the final offer price is too high the home will not appraise and the buyer will not be able to get financing to complete the purchase. Lenders are VERY CAUTIOUS right now and many deals fall apart because of the appraisal.
When prices are raising or falling quickly pricing becomes more difficult. You have to depend even more on your Realtor to get the pricing right.
It makes no difference if you are in El Dorado Hills, Folsom, Cameron Park or any other city or town in California, or in any other state. The same rules apply. If you are considering selling, contact your Realtor today!
If you have any questions or want to put your home on the market call today: (916) 337-0658. You will get a no-cost market evaluation and suggestions on how best to maximize your selling net!
