Not only does owning a home give you a haven for yourself and your family, it also makes great financial sense because of the tax benefits — which you can’t take advantage of when paying rent.
The following calculation assumes a 28 percent income tax bracket. If your bracket is higher, your savings will be, too. Based on your current rent, use this calculation to figure out how much mortgage you can afford.
Multiplier: x 1.32
Mortgage payment: _________________________
Because of tax deductions, you can make a mortgage payment — including taxes and insurance — that is approximately one-third larger than your current rent payment and end up with the same amount of income.
Source: National Association of REALTORS®
•Don’t apply for new credit
•Don’t co-sign on a loan
•Don’t dispute anything on your credit report
•Don’t change bank accounts
•Don’t close any credit card accounts
•Don’t finance any elective medical procedure
•Don’t make a major purchase (car, boat, jewelry, etc.)
•Don’t max out or over charge your credit card accounts
•Don’t open a new credit card account
•Don’t take out a new loan
•Don’t transfer balances from one account to another
If you encounter a special situation, it is best to discuss it with your lender.
Source: Mortgage Options Lending
Access to mortgage credit is at its highest level in three years, and credit standards are expected to loosen even more this year, according to a newly released index by the Mortgage Bankers Association.
The Mortgage Bankers Association index rose to a 114 reading in March of this year, which is the highest reading in the gauge’s three year history.
Mortgage underwriting standards have gotten easier over the last two to three years, but nowhere near the loose standards of the 2005 and 2006 era.
Nearly 17 percent of the large banks recently eased their credit standards for prime purchase mortgages, while 5.6 percent have tightened their standards. The remaining banks have left their standards the same. This information comes from the Federal Reserve’s recent senior loan officer survey.
Source: Realty Biz News (4/14/2014)
Follow these tips to improve your odds of getting a mortgage application approved:
•Do not quit or change jobs.
•Do not make any large purchases.
•Do not have your credit pulled.
•Do not deposit large sums of money.
•Do not open, close or transfer asset accounts.
•Do not increase your credit balances.
•Do not stop making payments on anything.
•Do not start a home improvement project that would require a loan.
•Do not co-sign a loan for anyone.
•Do not fudge on any of the facts on your loan application.
The Department of Veterans Affairs recently announced that the number of loans it guaranteed reached a record high in 2013.
The VA guaranteed almost 630,000 mortgage loans in 2013 according to Mike Frueh, the director of the VA’s Loan Guaranty Program.
An overall tight lending environment is making VA loans more attractive to current and past service members.
VA loans do not require a downpayment. Roughly 90 percent of all VA loans for home purchases are made with no money. These loans do not require private mortgage insurance to be purchased, as with most other high loan to value mortgages.
States that have seen the largest increase in VA loans within the past year are Arizona (up 40 percent in 2013 over 2012), Ohio (30 percent) and Connecticut (30 percent).
Sources: The New York Times and REALTOR®Mag
If you lost your home due to a foreclosure or short sale, you probably would like to own a home once again. The good news is that a number of guidelines have changed which may allow you an opportunity to buy a new home sooner than you think.
The traditional waiting period after a foreclosure is seven years. However; these waiting period guidelines may change and you would be best served to get up to date information from a qualified mortgage professional. Many lenders will shorten the waiting period some if there were extenuating circumstances surrounding the foreclosure of your home. Was there a death or illness that prevented you from earning enough money to meet your mortgage obligations? Did you loose your job or incur a substantial pay cut for some reason? These and similar reasons might be enough for a lender to shorten your waiting period after a foreclosure.
Your credit is often re-established quicker after a short sale than a foreclosure. Generally lenders will require only a two-year waiting period before they will consider you for another mortgage. Once again; seek the advice of a licensed mortgage professional to obtain the latest information on their qualifying guidelines.
There were several favorable events that benefited the average home buyer in 2013:
•Mortgage rates remained low
•The heated bidding wars that were happening in some markets ceased
•Investor buyers have cooled off, creating less competition and holding down prices
•The latest in technology has made home shopping easier for most buyers