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Archive for December, 2009

What is a Mortgage Contingency?

December 24, 2009 Leave a comment

A Mortgage Contingency provides  protection to the buyer. It allows the buyer to void the purchase contract without penalty if the buyer is unable to obtain financing on the terms specified in a contract.

For example, the clause may read:

The contract is contingent on the buyer obtaining approval for a 30-year mortgage for $200,000 at no more than 6 percent interest within 60 days. Also, it may specify the type of loan (fixed or variable).

Because this type of clause favors the buyer, It  would be a good idea for the buyer to obtain “Pre-qualification”  from a lender, which assures the seller that the buyer will not use the clause to void the contract unless some extraordinary circumstance arises.

Keep in mind, that the seller may not agree to a Mortgage Contingency and there is not much the buyer can do.  But to not have a Mortgage Contingency, could lead to the buyer having to finance the home with an unfavorable interest rate. The Buyer should always be cautious about signing a purchase contract that does not contain a Mortgage Contingency.

What does a Home Inspector do and how will it help me?

December 22, 2009 Leave a comment

A Home Inspector checks the safety of your potential new home. Home Inspectors focus especially on the structure, construction, and mechanical systems of the house and will make you aware of only repairs, that are needed.

The Home Inspector does not evaluate whether or not you’re getting good value for your money. Generally, a Home Inspector checks and gives prices for repairs on:

  • electrical system
  • plumbing and waste disposal
  • water heater
  • insulation and Ventilation
  • HVAC system
  • water source and quality
  • potential presence of pests
  • foundation
  • doors and windows
  • ceilings, walls and floors
  • roof

Be sure to hire a Home Inspector that is qualified and experienced.

It’s a good idea to have an inspection clause in the offer when negotiating for a home. An inspection clause gives you an “out” on buying the house if serious problems are found, or gives you the ability to renegotiate the purchase price if repairs are needed. An inspection clause can also specify that the seller must fix a problem before you purchase the house.

I suggest that you be present during the inspection. Following the inspection, the Home Inspector will be able to answer questions about the report and any problem areas. This is also an opportunity to hear an objective opinion on the home you’d like to purchase and it’s a good time to ask general maintenance questions.

Renting compared to Owning a home

December 17, 2009 Leave a comment

The two don’t really compare at all. The one advantage of renting is being generally free of most maintenance responsibilities. But by renting, you lose the chance to build equity, take advantage of tax benefits, and protect yourself against rent increases. Also, you may not be free to decorate without permission and may be at the mercy of the landlord for housing.

Owning a home has many benefits. When you make a mortgage payment, you are building equity. And that’s an investment. Owning a home also qualifies you for tax breaks that assist you in dealing with your new financial responsibilities- like insurance, real estate taxes, and upkeep- which can be substantial. But given the freedom, stability, and security of owning your own home, they are worth it.

Let me show you how to own your dream home.  If you can afford your rental fees, then you can own a home.  With all the new tax credits for first time home buyers and mortgage programs offered, you may qualify to buy your dream home.  Give me a call today and I can show you several options available to first time home buyers.  Start the New Year off right with your keys to your new home.

What is the difference between Pre-qualifying and Pre-approval?

December 17, 2009 Leave a comment

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender’s actual commitment to lend to you. The lender will need your financial records and will order a report on your credit history. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

I am looking for a house, How can FHA help me?

December 15, 2009 Leave a comment

FHA insured mortgages offer many benefits and protections that only come with FHA:

Easier to Qualify:  Because FHA insures your mortgage, lenders may be more willing to give you loan terms that make it easier for you to qualify.

Less than Perfect Credit:  You don’t have to have a perfect credit score to get a FHA mortgage. In fact, even if you have had credit problems, such as a bankruptcy, it’s easier for you to qualify for a FHA loan than a conventional loan.

Low Down Payment:  FHA loans have a low 3.5% downpayment and that money can come from a family member, employer or charitable organization as a gift. Other loan programs don’t allow this.

Costs Less:  FHA loans have competitive interest rates because the Federal government insures the loans. Always compare a FHA loan with other loan types.

Helps You Keep Your Home:  The FHA has been around since 1934 and will continue to be here to protect you. Should you encounter hard times after buying your home, FHA has many options to help you keep you in your home and avoid foreclosure.

FHA does not provide direct financing nor does it set the interest rates on the mortgages it insures. If you need more information, contact me.

Purchase Improvement Loan

December 10, 2009 1 comment

PHFA’s Purchase Improvement loan allows buyers who qualify for a Keystone Home Loan or a Keystone Home Loan PLUS  to purchase and improve/repair a home within one transaction. Eligible buyers may include between $1,000 and $15,000 for repairs and/or improvements with a conventional PHFA first mortgage, as long as the As Completed appraised value supports the cost of the repairs. This allows the buyer to make needed repairs right away, without having to take out another loan at a higher rate and with a shorter repayment period.

Common repairs or improvements are:

  • Renovation of plumbing or electric systems
  • Installation of improved heating or air conditioning systems
  • Addition of living space
  • Renovation of a kitchen or bath area
  • Replacement of a roof
  • Energy conservation and solar energy improvements 
  •  

    The purchase price plus the cost of the repairs can not exceed PHFA’s applicable purchase price limit.  The loan amount will be based on the lesser of the total acquisition cost or the as completed appraised value. 

    Need more information, contact me today.  Are you ready to start looking for your new home?

    Tax Credit Advance (TCA) Loan Program

    December 10, 2009 Leave a comment

    PHFA’s Tax Credit Advance Loan Program, or TCA, provides an upfront, interest free loan to eligible borrowers so they can apply their 2009 or 2010 federal income tax refund to their down payment and/or closing costs associated with the purchase of their home.  This is not a grant,  this is a loan that must be repaid. Loans closed in 2009 are due to be paid back to PHFA by June 30, 2010. Loans closed in 2010 are due to be paid back to PHFA by June 30, 2011.   

    First-time homebuyers may receive the lesser of 10% of the purchase price OR $6,000 for newly constructed homes, $5,000 for existing homes .  Non first-time homebuyers may receive the lesser of 10% of the purchase price OR $4,000 for newly constructed homes, $3,000 for existing homes. 

    A minimum down payment is required.  You must invest at least $1,000 of your own funds for conventional loans. This is not required for loans insured by FHA or guaranteed by USDA/Rural Development (RD) or the Veteran’s Administration (VA).  

    Contact me for more information. 

      

    I want to buy a home, should I wait until interest rates go even lower?

    December 9, 2009 Leave a comment

    This is a question that I get quite often.  My response is why take that chance.  Current mortgage interest rate are extremely slated for a home buyer. It has been said quite often, that this is a buyer’s market.  In fact, rates for 30-year, fixed-rate mortgages are clearly hovering near 30-year lows.  I can not predict whether rates will go up or down.  Know one can predict this, even a professional who follows the market for a living can not figure out when interest rates will bottom out.  Waiting to predict the market is a dangerous game because you may lose and have to pay higher interest rates. Which results in higher monthly mortgage payments.   It would be like playing dice.  Don’t take that chance.

    Home buyers are smart intelligent consumers and are just looking for a little support and guidance.  This will be the largest purchase most will make in their lifetime.  It’s my job to be informative and honest. I will try to inform my home buyer,  that this is the smartest and safest time to buy their dream home.  We know that interest rates are low today. We know that home prices are down. We know that there are plenty of homes on the market to choose from. We know that sellers are willing to bargain.  And we know that builders are willing to offer attractive incentives to get you into your brand new dream home.

    Give me a call today, so we can start looking for your dream home.

    HOMEstead Downpayment and Closing Cost Assistance Loan

    December 7, 2009 3 comments

    Homebuyers eligible for the HOMEstead program may qualify for up to $10,000 maximum  to $1,000 minimum in down payment and closing cost assistance in the form of a no-interest, second mortgage loan. The loans are forgiven at 20 % per year over 5 years.  The first mortgage is provided by PHFA at the same rate as the Keystone Home Loan PLUS program.  A fee of 1 % plus $300 is applicable, but may be financed by the HOMEstead loan.

    You must have money to make a down payment of at least 3 % of the purchase price, or $1,000 if your credit score is at least 660. HOMEstead funds provide the remainder of the down payment and the closing costs.  In certain cases, based upon family need, the funds may provide additional down money to make the property affordable to the buyer.

    Buyers participating in PHFA’s Keystone Home Loan Program are eligible to apply if they meet certain income limits and home cost limits which vary by county.  Most major cities and seven counties are wholly excluded from the program because they receive their own federal allocation.  The home must meet other property guidelines specified by federal rules. Federal regulations for Lead-Based Paint Hazard Reduction (24 CFR Part 35) are applicable to HOMEstead Second Mortgage Program applicants.

    PHFA homeownership loan programs are made by local lending institutions, not by the Agency itself. PHFA HOMEstead funding is therefore allocated to eligible homebuyers on a first-come, first-served basis.

    Contact me for more information.  Are you ready to start looking for your dream home?

    PHFA offers home loans with low interest rates & fees

    December 7, 2009 1 comment

    The Pennsylvania Housing Finance Agency (PHFA) offers home loans with low-interest rates and fees through two programs:

    KEYSTONE HOME LOAN- This one has the fewest eligibility requirements and the highest income and purchase price limits. You don’t even have to be a first-time home buyer if you are buying a home in a ’Targeted’ area. These areas are indicated on the list of income and purchase price limits(call me for the list). First-time buyers may apply to receive up to $1,500 in assistance in the form of a zero percent interest loan that does not require repayment until the buyer pays off or refinances the Keystone Home Loan first mortgage, or sells the home.

    KEYSTONE HOME LOAN PLUSThis one has the lowest rate available, but the income and purchase price limits are also lower, and there are some additional eligibility guidelines(call me for these guidelines). Buyers eligible for the PLUS program may also receive up to $3,000 in assistance in the form of a zero percent interest loan that does not require repayment until the buyer pays off or refinances the PLUS first mortgage, or sells the home.

    Both programs have maximum income and purchase price limits that vary by the county in which you are buying a home. You may also need to be a First Time Buyer and meet other eligibility guidelines specific to each program. All of PHFA’s loans have a fixed interest rate for 30 years, and there is no early payoff penalty.

    If you are interested in hearing more about these programs, please contact me for more information.  Your dream home is waiting for you!