2.6%  – Percentage the monthly cost of owning the averaged price home has decreased since January.

5.9% -  Percentages rents have increased this year.

Courtesy of KCMBLOG

Tips To Present a Stronger Mortgage Application

Posted: Thu, 06 Oct 2011 11:00:54 +0000

As underwriting guidelines for lenders become more stringent, we need to re-examine what a good mortgage application looks like. As home buyers begin their search for a home, there are a few items they should be aware of that they can do to help get their loans approved (with the best possible terms), and, at the same time, lessen some of the stress that goes along with the mortgage process.

1. Income documents

Most lenders want to see a full month of paystubs and two years’ complete Federal Tax Returns. Assembling them ahead of time and holding on to every paystub you get is a good idea even before you find a home and/or submit your mortgage application because it will save you time later. Moreover, looking at those documents and being prepared to explain any deductions that show up is crucial. Child support, alimony, garnishments, and Unreimbursed Employee Expenses are often crippling factors that, if explained and dealt with upfront, can make your loan approval smoother.

2. Asset documents

Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for large deposits because large deposits can signal a new loan that wouldn’t show up on your credit report yet. What’s a “large deposit”? Typically, any deposit that would represent more than your income can support. If you make $5000 a month, after taxes you likely net $3800 (or $1900 a bi-weekly pay period). Therefore, deposits in excess of that will need to be explained and documented. Sold a motorcycle? Have a paid receipt and motor vehicle documents in place. Received a gift? You will need a Gift Affidavit, proof of the donor’s ability and transfer of the funds. Any and all questions should be discussed with your loan officer.

3. Credit Score Optimization

Do your best to curtail your use of credit as it relates to your available credit lines. Target a cap of 30% of usage of available lines to get the best scores. Do NOT cancel credit cards. That will lower your amount of available credit, thereby raising your percentage of usage. That will damage your score. Do NOT shop for a car, explore life insurance, apply for a new credit card or increase the limits on your current cards because the running of your credit by people in other industries will also lower your credit score. Most importantly, don’t do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have.

4. Appraisal Concerns

It’s unlikely you will make an offer to purchase without checking out comparable home sales. It’s also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently on the market and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.

Overall, it is recommended that you hold onto copies of everything financial, think before allowing your credit to be run and work with an agent and loan officer who can use their experience to put your loan application in its best possible light…as soon as you start thinking about buying a home.

KCMBLOG

Home Seller Information

Many Buyers have been  sitting on the sidelines waiting for home prices to hit rock bottom. They want to guarantee that they are purchasing at the best possible price. Like them, we also believe that prices still have some room to fall in most markets. However, we disagree that waiting is a good financial decision. The buyer should not be concerned about  housing prices??? They should be concerned about cost.The cost of a house is made up of the price and Interest Rate they will be paying. Two different news releases yesterday highlight this point.

PRICES

The National Association of Realtors (NAR) released their 4^th quarter housing research report. In the release, they reported that home sales rose 15.4% in the 4th quarter over the 3rd quarter. They also showed that prices remained stable during the year:

The national median existing single-family price was $170,600 in the fourth quarter, up 0.2 percent from $170,300 in the fourth quarter of 2009.

A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the  other news released yesterday paints a different picture.

INTEREST RATES

The Primary Mortgage Market Survey was released by  Freddie Mac which showed that the 30 year fixed rate mortgage was at 5.05%.

œLong-term bond yields jumped on positive economic data reports, which placed upward pressure on mortgage rates this week¦As a result, interest rates on a 30-year fixed-rate mortgage rose to the highest level since the last week in April 2010.

So prices have remained stable but interest rates have risen dramatically in the last 90 days. What does that mean to a buyer looking to purchase a home this year?

The price is the same. It just costs more.

TODAY –           A $200,000 loan amount and a %5.05 interest rate   = a payment of $1079.76
NOV.2010 – A $200,000 loan amount at           %4.125 interst rate =   a payment of $969.30
By sitting on the sidelines for the last 90 days a purchaser lost:

• $110.46 a month
• $1,325.52 a year
• $39,765.60 over the thirty year life of the mortgage

If you buy a $400,000 home, double all these numbers.

END RESULT

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. Buyers should not worry where prices are going. They should be concerned where costs will be later in the year.

Welcome to Scott & Tammy Watson’s Blog! This blog will provide you with valuable information, tips, and general insight into the real estate market in Prosper,Frisco,Plano,McKinney,The Colony., and Little Elm.