Adding Value by Dennis O'Hagan

Tips for First Time Home Buyers...

If you are currently in the market for your first home, you probably have lots of questions. You are about to be making an important decision for your future, a great investment of both money and time. We have a wealth of experience helping first time buyers like you make sound, informed decisions. Here are some tips that can help make your home buying process successful:

• Tip #1: Do Your Homework
  The perfect home won't find you by itself. The key step in buying a home is doing the proper research. Educate yourself on local schools, neighborhoods, and the kinds of homes available. By reading available materials and talking with experts such as ourselves, you can start to put together your idea of the perfect home.
• Tip #2: Start Planning
  Most decisions benefit greatly from proper planning, and home buying is certainly no exception. Start a filing system with sections such as home buying, home financing, and service providers. By forming a home buying plan you can more easily focus on the most important factors and help give structure to the entire process. Our website is a great resource for property information.
• Tip #3: Get PreQualified
  Getting prequalified for a loan normally only requires a short phone conversation with a lender, and can greatly help your home search. Prequalification does not guarantee you a loan, but it does provide you with an estimated monthly payment and a price range to use as a guide when shopping for homes. Being prequalified can also often indicate to sellers that you are a serious, prepared buyer.
• Tip #4: Look for Value
  When shopping for homes, it's important to consider potential value. Even if you're not planning to sell the home some time down the line, it's a good idea to consider the future value of the home. Protect yourself against things like falling prices and gradual shifts in the nature of the neighborhood. You may not think of a new home as a means to make money, but it's an important investment that requires caution.
• Tip #5: Decide What You're Looking For
  Settle on the home features that are important to you (covered parking, hardwood floors, architectural style, etc.) and make an ordered list. Having well established guidelines will help narrow down your search and will prevent you from being shown properties that lack your key amenities. It can help you make the decision not to buy an attractive property that doesn't really fit your needs. Our website has a search feature that allows you to filter thousands of listings based on attributes that you select. If you know you want a brick house with gas heat and a garage, you can get the results you're looking for.
• Tip #6: Relax
  You don't have to make an offer on the first home you see. Make sure to look at other listings in the area to get a feel for the marketplace. When you decide to make an offer on a house, consult with your real estate professional so that all of your questions are answered.
• Tip #7: Shop Around for Your Mortgage
  Deciding on the financing for your home can be as important as choosing a home itself. The first step is deciding what kind of loan best fits you: a fixed rate mortgage, or an Adjustable Rate Mortgage (ARM). There are benefits to each form of loan, and your real estate professional can provide you with more information. Next you'll want to begin to shop around for the best lender.
• Tip #8: Protect Yourself
  Be careful when signing a contract on a home that allows you to find financing, have the home inspected, and work through any problem areas that may arise. Paying for a quality home inspection is absolutely crucial! You can save yourself thousands in repair costs by being sure of what you're getting into.

More information for first time buyers can be found on our website, or by giving us a call. We are confident that we can provide the kind of exceptional service that will make this process an exciting one. Don't hesitate to contact us with any questions you may have, we would love to be of assistance to you.

Things to Consider When Purchasing a Home...

There are many issues to evaluate when considering a home purchase including what you can afford, what kind of loan best suits you, the property itself and once you find your dream house, how much you are willing to pay for it.

How Much Can You Afford?

Before starting your search for a home, you must decide how much you can afford. Generally speaking, it is recommended that the down payment be a minimum of 5-20% of the purchase price. In addition, there are two other standard thresholds to consider in terms of how much of your monthly income should be spent on housing.

• Your total housing costs (mortgage, interest, property taxes, insurance) should not exceed 28% of your income.
• The combination of your housing costs and all other monthly debt (car loans, student loans, etc.) should not exceed 36% of your income.

What Type of Loan Structure Works Best For You?

There are many different types of loans available. However, one of the basic decisions you'll have to make is whether you prefer the predictability of a conventional loan, knowing that your payment will be the same amount each month over the life of the loan, or whether you are comfortable with foregoing the fixed monthly payment for an adjustable loan where the initial interest rate is lower and the monthly payment amount will fluctuate periodically throughout the life of the loan. Both conventional and adjustable loans provide a variety of terms to select from to best meet your needs. A mortgage broker will be able to provide a wealth of information on the various options available as well as determine whether you qualify for any government-backed loan programs.

Where Do You Want to Live?

Once you have decided how much you can afford, then you must consider which areas to target for your property search that will both meet your budget constraints and are conducive to your lifestyle. Where do you wish to live: in the city with all of its hustle and bustle, in family-oriented suburbs, in the quiet countryside or perhaps in the mountains? Do you want to be close enough to walk, bike or ride the bus to your favorite destinations, or is a longer drive an acceptable cost to living further away from services? Are high quality school districts important to you either because you have children or for resale purposes? What degree of safety does an area need to possess? How close do you need to be to groceries, shopping, medical services and other amenities?

What Style of Housing Meets Your Needs?

Houses still have the greatest appeal and are a good option for individuals who want a place for the kids and/or animals to be able to run and play, for those who love to garden and create their own landscaping masterpiece, and for people who want a little elbow room between themselves and their neighbors. Houses come in all shapes and sizes: rambler, two-story, split level, modern, traditional, Victorian, Colonial, one room cabins, large mansions or estates. Newer homes located in housing developments will generally have a Homeowners' Association with wide-ranging dues/fees to cover community property expenses, bylaws and covenants, and enforcement practices; whereas, older homes or homes in more rural areas may or may not have any such associations.

Condominiums are frequently a good choice for individuals who prefer to live in an urban setting, people who travel extensively, and those who don't want the responsibility of maintaining a yard. Condominiums come in all sizes, ranging from apartment size to spaces that can exceed the size of an average house. Condominiums will most certainly have an association established to levy fees for building and grounds maintenance. When considering any condominium it is critical to review not only the by-laws and covenants prior to purchase, but also relevant financial documents to ensure that enough funds are in reserve to address future expenses and to prevent buying into an organization's mismanagement or poor planning.

Vacation properties and homes are often sought out in the mountains or near water access. While mountain locations provide easy access to outdoor activities such as skiing, snowmobiling, and snowshoeing in winter and hiking, biking in summer, homes near water provide for a wealth of summer activities involving swimming, boating, waterskiing and beachcombing. These properties can range from a parcel of unimproved land or a plot with a small cabin and just enough amenities to meet basic needs, to a large, fully modernized home suitable for year-round living.

Is This Your New Home Sweet Home?

Once you've found the perfect home, you'll want to try to assess how well the property has been maintained over time, carefully review all property disclosure documents and do a more thorough examination of the property for any hidden surprises. Hiring a home inspector who has extensive credentials is generally considered a wise move.

A home inspection should include a thorough review of:

• Structural elements: construction of walls, ceilings, floors, roof, foundations
• Exterior evaluation: elevation, drainage, driveways, fences, sidewalks, fascia, trim, doors, windows, lights, and exterior receptacles
• Roof/Attic: framing, ventilation, type of roof construction, flashing, and gutters
• Plumbing: identify pipe materials for potable, drain, waste and vent pipes as well as condition of toilets, showers, sinks, faucets, and traps
• Systems and components: water heaters, furnaces, air conditioning, duct work, chimney, fireplace and sprinklers
• Electrical: main panel, circuit breakers, types of wiring, grounding, exhaust fans, receptacles, ceiling fans and light fixtures
• Appliances: dishwasher, range/oven, built-in microwaves, garbage disposal and smoke detectors
• Garage: slab, wall, ceiling, vents, entry, firewall, garage door, openers, lights receptacles, exterior, windows and roof

You'll also want to know what isn't included in the home inspection. Some areas frequently not included in the inspection, or included only at a cursory level are:

• Asbestos
• Radon, methane, radiation, formaldehyde
• Wood-destroying organisms
• Mold, mildew, fungi
• Rodent presence
• Lead

Many home buyers have found talking to prospective neighbors quite enlightening. Not only can you learn more about the neighborhood and get a feel for who may be your future neighbors, but sometimes these interactions can provide valuable information including why the house is on the market, prior issues with the house (flooding/leaks, repeated pest infestations, illegal drug use/production) as well as general information about the neighborhood such as whether there are problems with vandalism and theft, high homeownership turnover, high level of rental properties, or local issues that may impact your interest (plans for a new road or shopping center, etc.).

Another frequently overlooked source of information may be your insurance company. For instance, if you are looking in an area that is prone to earthquakes or flooding, they should be able to tell you if the specific area has a higher than average level of claims which may impact your insurance premium and whether special insurance riders would be required for coverage. They may also be able to tell you if your premiums would be impacted by a higher incidence of claims due to theft and vandalism.

Factors to Consider When Preparing an Offer

Once you have decided you're interested in a specific home, the last step is figuring out how much to offer for it. There will be many factors to consider: your budget, how quickly you want/need to move, how quickly homes are selling, what similar homes in the area have been selling for, how long the house has been on the market, what repairs may be required and perhaps most importantly, how much you want this particular house.

Top Reasons to Own a Home

There's good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.

Despite these facts, homeownership rates have taken a hit since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. According to Morgan Stanley, the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Has this reduction been a fear-based one?

The top benefits of homeownership haven't changed, even in the face of a down economy. Here are the top five:

1. Savings: Be sure to check out the calculator at the end of this article. You'll find that long-term homeownership is still a way to get big savings.

2. Tax Breaks: They're not on the chopping block just yet. Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.

3. Equity: When you pay a landlord, it's money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you've built up over time.

4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is the same now as it will be in 30 years!

5. Security: When you own, it's yours. You can paint, improve, and decorate. The trees and flowers are yours to enjoy -- for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.

Should you rent or buy? For a strictly financial evaluation, be sure to check out The New York Times' Interactive calculator to crunch the numbers. This advanced calculator takes into account everything from yearly costs to selling costs and broker fees.

Experts have recommended for years that if you're planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you'll have a real asset. That brings real stability.

Home affordability is at near record highs. Now is a good time to run the numbers and see if buying makes good financial sense. If it does, then you're in store for a wealth of benefits that only homeowners can experience.

Published: August 30, 2011

Use of this article without permission is a violation of federal copyright laws.

THANK YOU Carla Davis for allowing me to puplish this article...  MUCH APPRECIATED...

FHA Loan Myths -- The Self-employed and FHA Loan Qualification

One of the biggest myths about getting an FHA home loan? The idea that self-employed people are automatically disqualified for an FHA mortgage because of their employment status. While it’s true that it’s tougher for some in the early stages of a small business to make ends meet, being self-employed is not the kiss of death on an FHA loan application.

Proof of this can be found on the forms and FHA mortgage pages of lender websites—most financial institutions offering FHA loans offer a page on the bank’s website offering “FHA loan prep” checklists which include advice on what to submit if you are self-employed. The notion that you can’t qualify if you work for yourself isn’t shared by lenders.

That said, it can be more difficult for some small business owners to qualify for an FHA loan, FHA refinance or homeowner bailout program for one simple reason; not keeping good records. You may be quite successful in your small business or as a freelance contractor, but if you can’t show on paper that you have a consistent income, the FHA can’t conclude that you are a good risk.

Your FHA loan application requires you to show not only that you were gainfully employed, but also what your net income was compared to business expenses. Self-employed people will also need to show a profit-loss statement. If you don’t keep good records of legitimate business expenses, don’t have your taxes professionally prepared, and guesstimate your profits and losses, the FHA loan process could come to a halt very quickly for you. The question your loan officer will ask goes from “Can you afford your monthly FHA home loan payments?” to, “How long until my applicant needs some kind of homeowner bailout program?”

This is why self-employed people should take plenty of extra time when planning to buy a home. For some, the average prep time is about one year—especially if there are issues with credit repair or disputes on credit reports to deal with. For a self-employed person, showing reliable income for two years is a very good way to make conditions as favorable as possible to get approved for an FHA mortgage.

That means solid record-keeping, an aggressive approach to finding (and keeping) steady work, and paying strict attention to your taxes. Remember that unlike those with traditional careers, there’s an additional layer of scrutiny to the ebb and flow of steady income. If you went a long period between contracts, or if your business shut down for a time, your loan officer will want to know why and whether such periods of inactivity could happen again or how they affect your ability to make your FHA mortgage payments.

Is it more difficult for self-employed people to get an FHA mortgage? Yes. Is it impossible? Absolutely not, but you need to plan for extra scrutiny to your personal bottom line, keep good records, and be able to show your loan officer that you are indeed a good risk.

Loan pre-qualification is different from loan pre-approval...

Before you make an offer to buy a home, be sure your financial affairs are in order by getting pre-approved or pre-qualified for a mortgage loan. Either scenario puts you in a stronger position as a buyer, but they mean different things.

When you are pre-qualified for a home loan, you provide a lender approximate income, current debts and any important details from your credit history. The lender uses these figures to calculate how much money you may be eligible to borrow. You may receive a Conditional Qualification Letter, which determines your likelihood of obtaining a loan. However, all information submitted during pre-qualification is subject to verification at the time your actual loan application is submitted. Because your financial situation has yet to be verified, there is no guarantee of a home loan.

Typically, pre-approval means that your financial situation has been verified by the lender. When you get pre-approved, you fill out a mortgage loan application and may have to pay an application fee. After an extensive examination of your financial situation, your lender will commit in writing to fund your loan, pending a successful appraisal of the home and a few other conditions.

Just because you’re pre-approved for a mortgage loan doesn’t mean you have to borrow the money. However, the lender must stand behind his written loan commitment unless something changes with your situation. Think how attractive you’ll be as a buyer when your offer for a house comes with a letter pre-approving you for the necessary mortgage loan.

There are some things that could cause a lender to withdraw from providing a loan after a pre-approval letter is issued. If your credit situation changes between your pre-approval and the loan’s funding, the lender could change your interest rate or even deny the loan application. So, while you’re buying a house, abstain from applying for credit cards or other loans.

If you haven’t done so already, get a copy of your credit report, which lists your financial history, including total debt and whether you pay bills on time. Checking your credit report regularly is the best way to spot identity theft, credit report errors or other financial missteps that very well could affect your ability to buy a home.

You’re entitled to one free credit report from each of the three credit-reporting bureaus every year. Find out how to obtain your free reports at AnnualCreditReport.com.

Be smart, take steps to secure your finances, and get pre-approved for a home loan. Soon you’ll be in the home you’ve always dreamed about. And, when you’re ready to find your dream home, give us a call (Cheryl @ 469-223-7568 or Den @ 214-507-7475) or send us email (Cheryl – [email protected] or Den – [email protected]).   We’ll be glad to help...

Does It Make Sense To Buy a Home?

The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen by over 25% and there may be more softening in prices to come. We realize that this has caused difficulty and in some cases heartbreak in many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast believe in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans current believe in the value of owning a home:

1. The National Housing Survey by Fannie Mae this past November.
2. The Housing Survey by the Gallup Organization completed last month.
3. The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.

Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

• § In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.
• § The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.
• § AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.
• § Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.
• § AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.
• § Fannie Mae: 67% of renters plan to purchase a home in the future. 
• § AAAH: 78% of homeowners and 58% of  renters believe now is a good time to buy.
• § Fannie Mae: 64% of those surveyed said it is a good time to buy a home.
• § Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Has owning a home been a positive experience?

Do renters aspire to own a home?

Is now a good time to buy a home?

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?

BIG THANKS to Herb Ziev for providing us with this incredible piece of information.  Here is Herb's contcat information:

Herb Ziev, M.B.A.                 

Ark-La-Tex Financial Services, Inc.

5160 W. Tennyson Pkwy., Suite 3001W                       

Plano TX  75024 

Office 972-398-7681

Toll-Free 1-866-704-2826, Ext. 181

FAX 972-759-8140

Cell 214-683-1427

[email protected]

Apply Online at HERBERTZIEV.benchmark.us

Thinking about buying a home???

Get your finances in order BEFORE you start looking 

As you think about buying a home and applying for a home loan, you need to consider your personal finances. How much you earn versus how much you owe will likely determine how much a lender will allow you to borrow. In a nutshell, most lenders don't want you to take out a loan that will overload your ability to repay everybody you owe. Although every lender has slightly different formulas, it is good to stick to the 28/36 rule. 

Typically, your monthly housing expense, including monthly payments for taxes and insurance, should not exceed about 28% of your gross monthly income. If you don't know what your tax and insurance expense will be, you can estimate that about 15% of your payment will go toward this expense. The remainder can be used for principal and interest repayment. 

In addition, your proposed monthly housing expense and your total monthly debt service combined cannot exceed about 36% of your gross monthly income. If it does, your application may exceed the lender's underwriting guidelines and your loan may not be approved. 

Depending on your individual situation, there may be more or less flexibility in the 28% and 36% guidelines. For example, if you are able to buy the home while borrowing less than 80% of the home's value by making a large cash down payment, the qualifying ratios become less critical. Likewise, if Bill Gates or a rich uncle is willing to cosign on the loan with you, lenders will be much less focused on the guidelines discussed here. 

Remember that there are hundreds of loan programs available in today's lending market and every one of them has different guidelines. So don't be discouraged if your dream home seems out of reach.

*Source:  Realtor.com

The Difference Between Pre-Qualification and Pre-Approval

Pre-qualification is the first step in obtaining mortgage financing. A potential borrower answers a few questions to provide the loan consultant with a quick snapshot of the borrower's income, existing debt, accumulated savings and whether or not there is a co-borrower. Signature(s) allow the loan consultant to run a credit report and begin to determine what loans are good candidates for this particular client. However, there are literally thousands of loan programs available. It is important for the loan professional to know the long-term financial objectives of the prospective homeowner.

Pre-approval is a written documentation that proves the borrower has full support of a lender. It means the form 1003 Uniform Residential Loan Application has been completed and reviewed by an underwriter. Based on the borrower's income, debt ratio and savings, the underwriter will provide a dollar amount this borrower is eligible for. Now the borrower has the convenience of shopping for a home in the price range agreed upon by the lender.

Pre-approval allows potential homeowners to shop as cash buyers, and that means negotiating power. Sellers will take an offer from a pre-approved shopper much more seriously and may even accept a lower bid because they know the financing is in place and the deal is secure.

Home Buyer's Tax Credit About to End

You're probably up to your neck by now in forms and paperwork as the April 15th income tax deadline approaches. Maybe you've already completed your taxes, paid your bill, or are awaiting your refund check. Either way, now is the perfect time to revisit the extended and expanded Home Buyer's Tax Credit.

Why? Because now, as you calculate your tax bill or your refund, you can finally see in real terms just how beneficial a tax credit of up to $8,000 can be to your bottom line.

Here's the basics:

Qualified 2009 and 2010 first-time home buyers can get up to 10% of the home's purchase price or a maximum of $8,000. In November 2009, legislation extended a tax credit of up to $6,500 (or up 10% of the home's purchase price) to long-time residents of the same primary residence if they purchase a new main home. To qualify, eligible taxpayers must show that they lived in their previous homes for a five-consecutive-year period during the eight-year period ending on the closing date of the new home.

Important details to remember:

1) You don't have to pay it back (as long as you stay in your qualified home for at least 36 months).

2) If you qualify for the credit, you can still apply it to this year's taxes, even if you've already filed your returns, or save it for your 2010 returns.

3) This is a true tax credit, not a deduction. If you qualify for the full credit, there will be an actual dollar-for-dollar reduction of up to $8,000 (or up to $6,500 for qualified repeat buyers) on your tax bill now or in 2010.

4) New income qualification limits have been put in place that expanded the pool of qualified buyers.

5) If you purchased a qualified home or plan to after reading this article, you must have a contract in place by April 30, 2010 (with closing to take place by June 30, 2010), so don't wait!

There are, of course, other details and qualification requirements and restrictions that you'll need to consider. But don't hesitate to give us a call if you have any questions. Also, if you happen to have your completed 2009 tax return handy, we'll help you calculate how much money you can get if you purchase a home and qualify for the full credit.

Craig Wilbur
Loan Officer/Production Mgr.
Liberty Residential Mortgage
Phone: (214) 801-3079
Fax: (214) 276-1317
[email protected]
www.craigwilbur.com

Comparing Mortgage Rates when Shopping for your Home Loan

When searching for the right home loan for your needs there are a number of things to keep in mind.  Do you want a fixed or adjustable rate loan?  Will you finance for Thirty years, fifteen years or twenty years? Will you use an FHA or VA loan or will a conventional loan serve you best?  The type of loan you will use is an important decision and is something a good mortgage loan officer/broker can assist you with.  Once you make a decision about the type of loan best for your situation you can begin looking for the rates that benefit you and the type of loan you have selected.

When comparing interest rates many people look for the best percentage rate or the least amount of points required.  Well both are important but the only way to compare rates from different sources is to look at the Annual percentage rate also called the APR.  The APR is the cost of credit expressed as a yearly rate for the first year of the loan. The APR includes the interest rate, points, broker fees, and certain other credit charges that the borrower is required to pay.  In effect all of the costs for credit paid up front and the interest incurred over the first year are combined to illustrate the total cost of credit.  So when you are talking with your lender be sure to request the APR so that you can compare it with other lending sources or lenders when deciding the best option for you.

Good luck with your house hunting.

 

The above information was provided to me by:

Bob Moseley
Loan Officer
Arden Mortgage
214-669-5706
[email protected]
www.Twitter.com/ArdenMortgage
Main Office:  972-720-8000
Fax:  972-720-8002

Texas Loan Officer License # - 84061