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What Do Lower Conforming Loan Limits Mean To You?

If you’re in the market to buy a home, you know what I am talking about. If you’re in the market to buy a home and you don’t know what I’m talking about – keep reading! It is vital information!

On October 1, 2011, as part of POTUS’ attempt to repair the country’s housing finance system, Fannie Mae and Freddie Mac will be reducing the size of loans eligible for purchase by them, in other words – lowering the conforming loan limits. In high cost areas (like Los Angeles county) this means that they will only be purchasing loans no bigger than $625,000 (dropping it from $729,000).

What does this mean? Politically, it’s a move away from the government-reliant system we have in place today and a step closer to the privatization of the housing market. What does this mean for a homebuyer? Well, if you are looking to purchase a home with a loan in the $625,000 to $729,000 range – your loan will no longer be considered to be "conforming" and will now be "jumbo." Jumbo loans often have higher rates than conforming loans (which means you will pay more interest on this loan). The government is aiming to reduce the risk taken on by these government agencies, by reducing the amounts of the loans eligible for purchase. But for you potential homebuyers, (in this range) you’re potentially looking at bigger payments.

The next impact affecting homebuyers, is the impact on home prices. Although some argue that this reduction will drive up demand (thereby increasing prices) for buyers to buy before the limits drop, that effect will be very short-lived, and it does not take the stringent financing requirements that most lenders have in place today.

Another drawback for homebuyers is the related increase in costs and fees that the Federal Housing Administration will be charging homebuyers looking to use FHA financing (meaning that they want to buy a home with a 3.5% down-payment). It sounds like looking to limit the taxpayers’ risks is also going to cost the taxpayers lots more money.

Helpful Tips To Guide You In Buying Your First Home

Buying a home can be very exciting! It’s part of the "dream" we all have for ourselves, the marriage, the family, the pet, the white picket fence – all of these things are dependent on having a home. Having means owning, not renting; to those of us wishing to make the most of our hard-earned money. But making the most of your money is not always easy – it takes a little bit of savvy and a lot of consideration.

Consideration means research, research and some more research. You need to know the facts. Not just about the home you are buying, but also the city, community, history and future projections, to help you determine whether this investment is right for you. While buying a home is not permanent – it is long term and you need to make sure the home you select matches your long-term lifestyle choices.

Budgeting – this is key! You do not want to get yourself into a home you cannot comfortably afford, or you will end up working and never being home to enjoy it; or unfortunately even potentially risking losing it or other valuable items in your life.

•Get familiar with home buying terminology. Know the difference between the types of loans, insurance, interest rates and programs available to you.

•Figure out your budget. Work with your loan consultant to determine what you can actually afford to pay on a monthly basis. Remember, a mortgage payment is not just principal and interest, there are taxes and insurance that will need to be paid. Also, the community you select a home in may have a homeowner’s association that charges a monthly fee. These are all in addition to the increased utilities, maintenance and potentially security costs that go along with owning a home. Remember, there no "super" to call when that toilet gets clogged!

•Get rid of your old bills! You’ll have lots of new bills to replace those! Try to pay off all your existing credit card bills. The less debt you have, the better loan you will qualify for.

• Read your paper work. HUD has a handy booklet on its site called "Buying Your Home: Settlement Costs and Helpful Information." It describes the home buying and settlement process and explains most of the expenses you will encounter. Although your lender will give you a copy, it’s a good idea to read it before you even consider applying for a loan.

• Ask questions. Make sure your loan and real estate consultants are the kind of people who take the time to explain every single step of the process and answer each of your questions. They are there to serve YOU! Buying a home is a serious decision and the people helping you should appreciate the opportunity to serve you. The service you receive should be attentive, respectful and consistent!

 

For more information, please visit www.crestico.com.

Financial Health

Did you know that the average credit score required nowadays to get approved for a loan is 140 points HIGHER today than it was just a few years ago? That’s a lot when you consider that credit only ranges from 100 to 850.

One of the most important factors in getting a loan to buy a home has been credit, and it remains to be quite significant when filling out applications for loans. This is in large part, due to the economy. The mortgage crisis we have been witnessing over the past 4 years had major impacts on the lending industry and institutions became less willing to extend credit, even to those who are well-qualified.

Financial responsibility is key! Those with poor credit are faced with less and less options, making it harder and harder to realize the American dream of owning your own home.

Qualifying for a loan isn’t the end of the story.. it’s just the beginning. Just because you qualify doesn’t mean you are getting a good rate. The difference that just 0.25% can make on a $500,000 loan is over $1000 a year, multiplied by 30 years, that’s $30,000 that could have been saved over the life of the loan. What could you do with an extra $30,000?

In this market, many people are eager to buy a home, thinking “oh the prices are so low – we gotta get this house!” but keep in mind, while the price may seem low – the interest rate you qualify for may not be as attractive. So, tend to your financial health, clean up your credit – then start making offers on homes.

For more real estate advice, or to have any questions answered regarding the home buying process, visit www.crestico.com.

How to get the lowest home mortgage refinance rates?

Are you struggling with your monthly mortgage payments? If answered yes, you must try your best to refinance your home loan as this is the best way to get back on your current monthly mortgage payments. Most mortgage loans carry high interest rates and with the unemployment rate touching a record level, an increasingly large number of homeowners are not being able to cope up with their monthly mortgage installments.  Refinancing is just taking out yet another home loan with favorable interest rates and terms so that you can repay the previous loan with ease. While there are many homeowners who want to refinance their home loans, they all love to know the ways in which they can get the best refinance rates in the market. Have a look at the ways in which you may secure low rates on the refinance loan.

1.Check your credit score: As you know that the lenders will always check your credit sore before lending you with a new line of credit, you must try your best to boost your credit score in order to get the best rate in the market. As the credit score is the best way to track the financial history of a person, you must take good care about the financial habits that can drop down your score. Most financial experts often say that one must initially go for credit repair before applying for a home loan so as to grab reasonable interest rates.

2.Shop around among different lenders: Refinancing can be done from your previous lender and from any other lender too. If you want to change the lender from whom you want to take out a mortgage refinance loan, you must shop around extensively so as to make sure that you get the most competitive rate in the market. The lenders are waiting to offer you the loans of their companies and thus you need to make sure that you’re choosing a loan that has the perfect interest rate that can help you save your dollars on the mortgage loan.

3.Pay points on the refinance loan:  Even if your credit score is not enough for you to secure a loan with an affordable rate, you can still get the lowest refinance rates. This is possible by paying points while taking out the new refinance loan. A point is1% of the loan amount that has to be paid in cash during the closing. This can lower the rates.

4.Choose a different term:If you refinance your mortgage loan at a 15 year term mortgage loan, you can get low rates on the loan. However, a 15 year term mortgage loan will require high monthly payments but will also ensure low rates at the same time.

Therefore, if you want to refinance your mortgage loans at a lower rate, you can easily follow the tips mentioned above. Get a loan at a low rate and repay the loan with ease, thereby retaining your home ownership rights.

Attention Future California Homeowners! Loan limits are dropping!

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