by Houtan Hormozian | Oct 18, 2024 | CRESTICO
The question that I get asked most often from client is “Is it a good time to buy a house?” Well, the answer to this question almost always depends on who is asking and what his/her reasons for buying a home are. Often people fall into the traps of wanting to buy a home so badly that they overlook many of the dangers and potentially stressful things that could happen down the line.
Many of my short sale clients have made themselves “house poor” (as the Department of Housing and Urban Development calls it). This is something I often warn my clients about. Being “House Poor” means that “… by putting too much emphasis (and income) into your housing expense, you may be forced to cut other expenditures, whether it be for travel, entertainment or some more important needs, such as education expenses or retirement funding.”
By making inappropriate housing decisions, many have exposed themselves to a great deal of financial exposure. By pushing themselves to their financial limits, they find themselves unable to meet their mortgage payment obligations as that payment takes a higher percentage of their income. When funds get short, other loans and obligations (and credit ratings) can and will suffer.
Additionally by not completely understanding the economic state of the nation, often homebuyers ignore housing values. Economic downturns are often accompanied by, at the very least, stagnation in housing values. And, even though it sounds crazy in markets that have seen double-digit annual appreciation in recent years, occasionally housing values will decline (as they have in recent years). Worse than a situation where it is difficult to pay the mortgage is one where there is the prospect of losing a home–or trying to sell it in a distressed market.
However, for savvy buyers with steady incomes, good credit and supple savings – this is a great time to buy a home. Firstly, mortgage Interest Rates are at their lowest levels years, meaning lower payments and the ability to devote less income to housing expenses. However, buyers should be warned against buying more house than they need simply because they can afford the payment.
Because less people are getting qualified for loans, there is less competition. As the market softens, less buyers will be in the market, meaning that negotiating position will be enhanced–and, it is unlikely that buyers will have to pay thousands of dollars over the listing price in order to get the home they want. More negotiating power usually means lower prices and lower monthly payments.
All in all, it can be a good and a bad time to buy a home depending on who you are and your financial health.
For more information, please visit www.crestico.com.
by Houtan Hormozian | Oct 18, 2024 | CRESTICO
Areas that will be affected in California are Riverside, San Bernardino, San Diego, Orange, or Los Angeles county. Starting October 1, 2011, temporary conforming and FHA insurable loan limits will be lowered nationwide.
HUD has also announced new (lowered) FHA insurable loan limits across the nation. California has several counties that will be negatively affected and potentially impact home buyers who have not saved a large down payment.
"Temporary loan limits" were enacted as part of the government’s 2008 economic stimulus package. At the time, the financial sector was entering its crisis and private mortgage lending was practically done. Financing was scarce for both homeowners and home buyers for whom loan sizes exceeded Fannie Mae and Freddie Mac’s national $417,000 limit — even for those with excellent credit and income.
Riverside and San Bernardino will no longer be considered a high cost area by Fannie Mae or Freddie Mac…which will affect you if you are looking to buy a home in the $350,000 to mid $450,00 price range.
County New FHA loan Limit New Conforming Limits will be as follows:
Riverside County $355,350 for FHA and $417,000 for Conforming
San Bernardino County $355,350 for FHA and $417,000 for Conforming
San Diego County $546,250 for FHA and $546,250 for Conforming
Orange County $625,500 for FHA and $625,500 for Conforming
Los Angeles County $625,500 for FHA and $625,500 for Conforming
The max conventional and FHA loan amount in Riverside and San Bernardino county is currently $500,000, but starting October 1st, 2011, it will drop by $144,650 for FHA , and for conventional loans, it will drop $83,000.
If you live in a high-cost area, or a former high cost area, mortgage rates may be low, but the amount of loan for which you qualify may be much less than you expect. You may find yourself ineligible to use a low down payment FHA loan to purchase your home, thus requiring you to with a HUGE down payment.
Whether you’re planning a refinance or a purchase a home, keep an eye on the calendar and act sooner…..contact Crestico today!
www.crestico.com
by Houtan Hormozian | Oct 18, 2024 | CRESTICO
The Hope for Homeowners program is what is being broadcast as the last hope for America’s Homeowners. Do you have a question about it? Read on for more information and feel free to use the contact information below, to get PERSONALIZED answers to any questions you may have!
As of November 19th, 2008. many changes have been made to the lending system in this country. Primarily, the loan to value ratio (LTV) has been increased from 90% to 96.50% for borrowers whose monthly mortgage payments are no more than 31 percent of their monthly gross income. Next, the process to remove subordinate liens has been simplified. Payments made up front are now allowed to motivate lienholders to give their consent and release the liens; thereby making more borrowers eligible for the program. Also, the terms of financing have been expanded and now incorporate 30 and 40 year amortization schedules, thereby reducing payments amounts.
The "HOPE for Homeowners Act of 2008" creates a new Federal Housing Administration program that will back FHA-insured mortgages to borrowers that are facing problems and stress as a result of their housing situation. New mortgages that will be offered by FHA-approved lenders will encourage and implement the Refinancing of abusive, unfair and malicious loans to dramatically improved terms that will allow distressed homeowners who are having difficulty making their mortgage payments some breathing room and enable them to keep their homes and families intact.
If you or anyone you know is facing difficulties when it comes to making their monthly mortgage payments, NOW is the time to act. If you have any questions regarding how this program could work for you, contact us and we will help you starting saving your future today!
by Houtan Hormozian | Oct 18, 2024 | CRESTICO
The Hope for Homeowners program is what is being broadcast as the last hope for America's Homeowners. Do you have a question about it? Read on for more information!
As of November 19th, 2008 many changes have been made to the lending system in this country. Primarily, the loan to value ratio (LTV) has been increased from 90% to 96.50% for borrowers whose monthly mortgage payments are no more than 31 percent of their monthly gross income. Next, the process to remove subordinate liens has been simplified. Payments made up front are now allowed to motivate lien holders to give their consent and release the liens; thereby making more borrowers eligible for the program. Also, the terms of financing have been expanded and now incorporate 30 and 40 year amortization schedules, thereby reducing payments amounts.
The "HOPE for Homeowners Act of 2008" creates a new Federal Housing Administration program that will back FHA-insured mortgages to borrowers that are facing problems and stress as a result of their housing situation. New mortgages that will be offered by FHA-approved lenders will encourage and implement the Refinancing of abusive, unfair and malicious loans to dramatically improved terms that will allow distressed homeowners who are having difficulty making their mortgage payments some breathing room and enable them to keep their homes and families intact.
If you or anyone you know is facing difficulties when it comes to making their monthly mortgage payments, NOW is the time to act. If you have any questions regarding how this program could work for you, contact your local Real Estate agent who can help you start saving your future today!
by Houtan Hormozian | Oct 18, 2024 | CRESTICO
It’s a buyer’s market!! You’ve read it, you’ve heard it and you see it everywhere you go. Signs, slogans and ads telling you it’s a buyer’s market and to get out there and buy a home! But before you log on to your local MLS or start going to open houses in your dream neighborhood, there’s one thing you should do to prepare yourself. You need to figure out HOW MUCH of a home you can afford to get out there and buy. There is no worse feeling in my opinion, then taking a tour of a gorgeous house, falling in love with it, mentally moving in and arranging your furniture JUST to find out that you can not afford it after all.
A major factor in owning a home is being able to afford it. Now, I’m not just talking about the expenses that come with home ownership in terms of maintenance, decorating, furnishing and tax. I am talking about the mortgage. Now, unless your rich Uncle Frank is leaving you a hefty inheritance, you are going to need to figure out your total monthly income and something called your DTI. This is your Debt to Income Ratio. This little fraction is going to be a key factor in the bank’s decision regarding how much money to loan you to buy your home. Basically, this is going to be a numerical expression of how much of your monthly income is already spent on bills and other expenses.
Now there are two different types of DTI: front and back. Front DTI is basically the amount of your income that is going towards your current housing costs, rent for renters and principal, interest, tax and insurance for homeowners. The other DTI is back which is basically the amount of your income that goes towards expenses like car payments, phone bills, credit cards and other kinds of recurring debt.
In order to get an FHA Loan, your front DTI needs to be about 31% which means that if your monthly income (gross) is $5,000, your payment cannot be more than $1,550. Conventional loans allow for a DTI as high as 33% which would make your payment a maximum of $1,650. Next you will need to determine your back DTI which is also based on your monthly income. Your back DTI reflects your debt and for an FHA loan is about 43% and a conforming is about 45%.
So, on that $5,000 monthly income of yours, you can have $2,150 in monthly payments for an FHA loan and $2,250 for a conventional loan. So if your car payment, student loans, credit cards, phone bill and child support expenses are less than $600 ($2,150 – $1,550), you will effectively qualify for an FHA loan.
This is something you should consider when deciding on buying a home. Although it is a buyer’s market, and there are several great deals out there; you want to make sure that a home you buy will be a home you can KEEP and that your home won’t turn into someone else’s great deal after you realize you can’t make your mortgage!
