Secrets to getting a mortgage with so-so credit

http://money.cnn.com/2011/07/05/real_estate/mortgage_underwriting/index.htm

Key Points:

• A good credit score. Borrowers usually need a minimum credit score of 620.
• Enough income to afford payments. The general rule of thumb: no more than 28% of your gross income should go toward housing costs.
• A loan-to-value ratio of 80%. Lenders want the home value to far exceed the mortgage balance because if a borrower defaults, the bank sells the home to recoup the loss.
• The ability to make a 20% down payment, plus closing costs.
• FHA loans require 580 score for 3.5% down and 500 for 10% down
  

To Own Or Not To Own

Not sure if you are ready to purchase that home yet? Thinking about renting for just one more year? Plug some numbers into this calculator and see what you come up with. I would suggest doing an interest rate of around 5.3% and 10% down. Now you could go FHA financing and do 3.5% down, but you will also have to then pay monthly PMI on your loan, which can't be calculated with this calculator.

Own Vs Rent Calculator

Enjoy

Mortgage denied: Sometimes, for no good reason

Found this article today and thought it was quite interesting.

"A quarter of all mortgage loan applicants get denied for loans, according to the Federal Reserve. Many other potential homebuyers never even try to get loans, said Jerry Howard, president of the National Association of Home Builders."

http://money.cnn.com/2011/04/19/real_estate/low_risk_mortgage_denied/index.htm

Key points from the article.....Why you could be denied a mortgage


Your debt is too high - If someone's total debt payments exceed 45% of income, the mortgage will be denied. In 2009, the limit was 55%.
The wait after foreclosure is extended to seven years from five-Despite high credit scores, ample assets and income and steady employment, lenders are not allowed to finance their Fannie/Freddie mortgages if their foreclosures happened any time within the past seven years.
Missed payments on credit card debt-They used to be okay with a missed payment or two. Now, one missed payment will hit your debt-to-income ratio, because banks will add 5% of your outstanding loan balance to the debt part of the calculation.

Closing costs..what are they and how much will they cost you

When shopping for a new mortgage, you will have to pay a random assortment a fees called "closing costs". Every lender varies in how many fees and the price of them, so it is good to ask around before committing to one lender.

Fee-ed Up? Here are just some of the costs of closing on a mortgage.
	Fee  Average cost*  Application  $272  Appraisal  $310  Credit report  $28  Document preparation  $206  Processing  $288  Recording  $86  Underwriting  $236

*Based on a $100,000 loan. Not every lender surveyed charges all of these fees.

Source:  HSH Associates December 2003 survey of lenders

So besides paying for a home inspection and down payment, these fees will be expected to be paid at the time of closing also!

Article: http://money.cnn.com/2004/03/22/pf/yourhome/closingcosts/index.htm

New Comey & Shepherd Lifestyle Search

Link: http://www.comey.com/spatialframeset.asw

Here is a new way you can search for your new home. Comey & Shepherd have designed a webpage that allows you to look at a map and use sliders based on certain requirements (beds,baths, keywords, etc) and it will show you what is available on the market. You can also see what has recently sold. Here is a picture of what the screen looks like:

Let me know if you got any questions!

Its Not all Doom and Gloom

Found this article and thought I would share. On average, still 50 homes a day are closing in the Cincinnati area!

Home sales inching up:

NEW YORK (CNNMoney) -- Sales of existing homes recorded modest gains in January, the third straight month of month-over-month increases.

According to the National Association of Realtors, homes sold at an annual rate of 5.36 million in January, up 2.7% from December and 5.3% higher than January 2010 sales. At the same time, the median home price fell 3% to $158,000, compared to a year earlier.

It was the first time in seven months that the monthly sales total was higher than the year before.

"The up trend in home sales is consistent with improvements in the economy and jobs," said Lawrence Yun, NAR's chief economist.

The report was slightly stronger than expected. A consensus of experts surveyed by Briefing.com had expected sales to hit 5.23 million.

Yun pointed out that home sales have benefited from unusually favorable conditions: Mortgage rates are still very low; there's a large supply of homes to choose from; and home prices have fallen to near post-housing bust lows.

One factor holding buyers back is the still tight mortgage lending.

"Buyers have been constrained by unnecessarily tight credit," said Yun. "As a result, there are abnormally high levels of all-cash purchases, along with rising investor activity."

Interest Rates on the Riiiiiiiiiise

Read a great article on Realtor.com today discussing interest rates thus far this year in 2011. They are no longer dropping, something to consider!

Mortgage Rates Continue to Climb
Mortgage rates are continuing their gradual climb upwards after reaching record lows. The 30-year fixed mortgage rate rose to 4.8 percent from 4.74 percent the previous week, Freddie Mac reports. The average on 15-year mortgage rates also rose slightly from 4.05 percent to 4.09 percent for the week. 

In November, 30-year loans had reached a 40-year low at 4.17 percent and the 15-year mortgage rate was at 3.57 percent. 

The average on the five-year adjustable-rate mortgages this week increased to 3.7 percent from 3.69 percent the previous week. 

Meanwhile, the Mortgage Bankers Association says it expects mortgage lending to drop considerably in 2011, due to high unemployment, borrowers’ diminished credit coming out of the recession, and more lenders not willing to take on a high risk.

MBA says it expects new loans this year to decrease by 36 percent to its lowest level in more than a decade, falling to $966 billion in 2011 from $1.5 trillion this year.

Earlier in the week, MBA reported a drop in mortgage applications to the slowest refinancing activity in more than a year. Mortgage applications dropped 12.9 percent in the week ended Jan. 21, according to MBA’s seasonally adjusted index. 

The index dropped 15.3 percent, which is the lowest level since January 2010. Refinancing activity has continued to decline since October from rising interest rates and tighter underwriting standards.


Source:http://www.realtor.org/RMODaily.nsf/pages/News2011012802?OpenDocument

Rent vs Buying in Cincinnati

People will always ask, am I better off renting or actually buying? The true answer to that question is that it depends on what market you are in. Every city/state has a different housing market. That being said, in Cincinnati it is a great time to be buying.

Moody's Analytics, price-rent ratio for third quarter of 2010 is located below. As a general rule of thumb, you should often buy when the ratio is below 15 and rent when it's above 20. If it's between 15 and 20, lean toward renting.

Location	Price-Rent Ratio
Atlanta, GA	12.82
Austin, TX	21.08
Boston, MA	17.71
Baltimore, MD	17.42
Charlotte, NC	25.98
Chicago, IL	15.09
Cincinatti, OH	13.74
Cleveland, OH	11.43
Columbus, OH	15.61
Dallas - Fort Worth, TX	16.98
Denver, CO	22.08
Detroit, MI	12.32
East Bay, CA	35.06
Fort Lauderdale, FL	15.19
Hartford, CT	18.52
Honolulu, HI	34.72
Houston, TX	16.01
Indianapolis, IN	14.68
Inland Empire, CA	14.75
Jacksonville, CA	15.12
Kansas City, KS	14.4
Las Vegas, NV	13.89
Long Island, NY	21.09
Los Angeles, CA	14.99
Memphis, TN	17.92
Miami, FL	14.57
Milwaukee, WI	22.36
Minneapolis, MN	14.04
Nashville, TN	23.88
New Orleans, LA	15.66
New York, NY	15.43
Norfolk, VA	19.88
North - Central New Jersey	24.69
Oklahoma City, OK	16.11
Orange County, CA	27.14
Orlando, FL	13.1
Palm Beach County, FL	16.64
Philadelphia, PA	15.94
Phoenix, AZ	12.35
Pittsburg, PA	11.71
Portland, OR	25.74
Raleigh, NC	24.39
Richmond, VA	22.18
Sacramento, CA	15.85
Salt Lake City, UT	18.05
San Antonio, TX	17.77
San Diego, CA	21.75
San Francisco, CA	27.17
San Jose, CA	32.27
Seattle, WA	26.96
Bridgeport, CT	18.49
St. Louis, MO	14.04
Tampa, FL	13.08
Washington - Northern Virginia - Maryland	18.48
Manhattan, NY	28.34
Metropolitan Area Average	14.85
U.S.	10.42

Be glad you aren't living in San Jose! Let me know if you have any further questions about this. If you do find yourself having to rent for another year though, I can help you with that also!