DEAN GRAZIOSI: DEAN GRAZIOSI REVIEW – REAL ESTATE FEED BY DEAN GRAZIOSI

Now that you’ve decided to purchase a new home the next step is finding out if you qualify for a home loan.  If you have perfect credit then qualifying will not be a problem.  But if you’re like many people out there, you will have flaws on your credit report, the important thing to find out now is how they will affect your chances of being approved for a home loan.

There are many things that mortgage lenders look at, one is how much debt do you currently have.  Having too much debt can lead to you being denied a home loan.  They’ll see that you’re already overextended and you may have trouble making a mortgage payment.  You should calculate your debt-to-income ratio to see where you stand.  Add up all your monthly bills and divide them into your monthly income.  You will then multiply the result by 100 to get a percentage.  The number represents your debt to income ratio.  Mortgage lenders prefer that number be lower than 28 percent.  If you are higher than 28 percent you may want to begin paying off some of your current debt in order to lower your ratio before applying for a mortgage.

Past-Due accounts also hurt your chances of being approved.  Before applying for a mortgage you may want to pay off any past due accounts that you currently have.  If you are unsure of which debts this includes, obtaining a copy of your credit report will help point them out.  You will have to contact each account holder and either pay off the past due amount in full or set up a payment arrangement.  This will help you pay off amounts that may be too large to pay off at one time.

Checking your credit report for any errors, if you find an error you can contact the reporting agency and appeal it.  This will have the error removed from your credit report.  Even what you feel is a small error may be enough to keep you from getting the loan that you need.  You should check your credit report at least once a year for any errors and have them removed as soon as possible.

Do not open any new charge accounts.  Adding new debt to your pre-existing debt is a sure way to get denied for a home loan.  Lenders want to see that you are responsible with your credit and opening new accounts doesn’t show them that you can be responsible.  If you are applying for a home loan it is important that you not apply for any other lines of credit at the same time.

Applying for a home loan shoes the importance of handling your credit responsibly.  If you have a few blemishes on your credit report it is not the end of the world.  Once you have cleared up any outstanding debt obtain a letter stating that your account has been paid in full.  This will prove to lenders that you are taking the necessary steps to qualify for a home loan.

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If you are in the process of purchasing a new home, the amount of money needed for a down payment may be more than you expected.  There are some ways in which you may be able to get assistance with your down payment.  If you are in need of assistance with your down payment, there are many programs that may be able to help.

If you are a first time home buyer, there are many programs that may help.  A first time home buyer is anyone who has not had ownership interest in a home within the last three years.  First time home buying programs are not only for those who are purchasing their first home, but can also be applied to anyone who may have had a foreclosure more than three years prior to buying a new home.  This improves your chances of qualifying for assistance greatly.

There are also state agencies that were designed to help buyers with their down payment.  These programs consist of buyers acquiring a loan from the agency in order to cover their down payment.  The buyer is then responsible for paying the money back to the agency on a monthly schedule.  The interest rates on these types of loans are usually lower than what a bank would offer.

You may also qualify for grants that are provided by the state you reside in.  These grants were designed to assist home buyers who are not able to come up with all of the required down payment.  There are certain requirements that must be met in order for anyone to qualify for these types of grants.  Consult your realtor or mortgage broker; they may be able to provide you with more information regarding grants.

If you are a veteran and you qualify for a VA loan, oftentimes there is no down payment required.  The VA loan covers the closing costs and down payment.  If you are a veteran and would like more information on acquiring a VA funded mortgage consult your local Veteran’s Administration office and they will be able to explain what is required.  Your mortgage broker may also be familiar with the requirements of a VA loan and can tell you if you qualify. 

Don’t let you inability to come up with a down payment hinder your dream of purchasing a new home.  There are many programs and agencies that were designed to help people in your situation.  With a little research and legwork, you may be able to qualify for a home loan and have the money required for the down payment.  Coming up with a down payment can be a stressful undertaking, but with the help of the agencies that were put in place to help, it has just gotten easier to buy a new home.

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With the real estate market the lowest it’s been in years and the market being flooded daily with foreclosed properties, now may be the perfect time to pick up a home at a large discount.  Although, many foreclosed homes come with their own set of issues, there are some diamonds in the rough that can be found for a fraction of what they are really worth.

Foreclosed homes sell significantly lower than their actual value.  This is due to the fact that the properties are now owned by the bank.  Because banks tend not to have a need for vacant homes that are costing them money to insure and keep in decent shape, they are looking to get rid of them as fast as they can.  What this means for you, is that you may be able to find a home that needs minimal work to make it look like new again. 

There are two ways in which you can purchase a foreclosed home from the bank.  One is dealing directly with the bank and submitting your offer to them, the other is to purchase homes at a bank held auction where bidders determine the selling cost.  If you choose to deal directly with the bank, you may be able to negotiate a better deal than if you were to involve a third party.  The benefit of purchasing a home at auction is that you may be the only person interested in the property and be able to purchase for a lower price than the bank was initially asking.

There are some challenges with purchasing a foreclosed property as well as benefits.  Once all the paperwork has been signed and you are in possession of the property you may discover problems that you weren’t aware of before the purchase was finalized.  To avoid finding yourself in this situation, you may want to have an inspection done on the property so that you are aware of any problems before you close on the property.  An inspection is relatively inexpensive compared to what you may have to pay in order to make the property livable.

You may have heard horror stories about the problems that come from buying foreclosed properties, while some are in dire need of repair there are some out there that are in nearly perfect shape.  One of the most important things you need to do before purchasing a foreclosed property is to do a bit of homework.  By doing some research into any problems the neighbors may have had with plumbing or flooding issues, you will get more information from a friendly neighbor than the bank might offer.  Research is the key to finding a foreclosed property that will need minimal work to become your dream home.

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During the recession, credit markets and especially those dazzling home equity lines of credit were called, limited and not for sale.  The home-equity line of credit business was on hold.  There are signs that this credit tool may be opening the doors again.  The word is out that the consumer should beware.  Terms are very different than in the real estate heydays.

Millions of homeowners watched as their home equity lines were shut down.  However, as the market has stabilized, lenders are slowly getting back in the home equity game.  The volume of new home equity lines is still less than 50% of the real estate boom days, but the trend is encouraging. 

In the home equity golden days, the loans typically were offered one half point below prime.  Those days appear gone.  The new rates are prime plus one percent.  The floor on new home equity rates is 4%. 

To qualify, the homeowners must have a minimum 20% equity position in the residence.  Overall, the home equity line of credit is a far better source of emergency funds than a credit card. 

The lines of credit also come with revised standards.  The days of 100% financing are gone.  Most lenders now want to keep total credit exposure at 80% of value or less on residential lines.  There are no assurances that the housing market has hit bottom and lenders are cautious.  Credit reviews are strict and must be fully documented and substantiated.

As the credit line rates are likely to rise, homeowners should only view the line of credit as a source of emergency funding.  Right now a $75,000 home equity loan would cost about $344 per month.  If rates increase, that on may soon cost about $469 per month.  Still, in certain situations, the line may be the way to go.

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