VallejoMarketWatch.com

How the Subprime Mess Helps You in Today's Real Estate Market

You may have been hearing a lot of news about the mortgage markets, real estate and Wall Street lately and I just wanted to shoot you this email to let you know what all this can mean to you...

The stock market has been fluctuating more than usual recently based on concerns that institutions invested in Sub-prime loans are hurting as a result of high delinquencies and foreclosures.  There is speculation that the mortgage delinquency problem may also be spreading into prime loans as well.  The dramatic ups and downs of the market are making investors nervous and have some politicians calling for Fannie Mae and Freddie Mac to buy these loans from struggling lenders.  Oversees markets are beginning to feel the effects too.

However, every cloud has a silver lining...

What this means to you the home buyer

Underwriting guidelines are getting more stringent. Simply put, one needs now to prove their income and may need to put 3-5% down. However,  zero down payment is STILL available!  Imagine that... having to actually verify your income and assets....kind of a make sense thing. 

Rates have risen over the past two weeks; yet, a mortgage can still be obtained in the 6-7 percent range - very low by historic standards. It is unlikely the Federal Reserve will raise rates in September.  In fact, CNBC was reporting this morning that the Fed is likely to cut rates...we shall see...

As a result of a return to normal underwrting standards many buyers are having a harder time qualifying. Consequently, home values have dropped across much of the area, making this the best buyers market seen in years!   Truly, you can have the pick of the litter when looking at homes and gain a variety of seller concessions.

Planning Your Mortgage and Seeking Pre-approval

Choosing the right lender is a key element to managing your mortgage. As a mortgage consultant, my goal is not just to provide you with a loan, but also to help select the one most beneficial to you and your long-term goals, and then, help you manage that debt over time. There are not many lenders out there who provide this type of personalized service.

My job is just beginning when your first loan closes. I will continuously monitor rates on your behalf, and stay in touch with you to make sure we remain on target with your financial goals.

Seek Pre-Approval

What's the difference between pre-qualification and pre-approval?

Pre-qualification is the starting point in your search for mortgage financing. A quick snapshot is taken which includes income, existing debt, savings, length of employment, etc. All of these factors will then be analyzed to determine your loan eligibility.

Pre-approval is written documentation that shows you have the support of a lender who is willing to finance you. It means an underwriter has reviewed your loan application. Based on your income, debt ratio and savings, the underwriter provides the dollar amount you are eligible to borrow. Now you can shop around for houses that fit into that loan amount category.

Here is the nice thing about the pre-approval: It gives you the leverage to shop as a cash buyer! With a pre-approval in hand, you now have the power to negotiate. The seller will take your offer much more seriously knowing you are already approved by a lender. Full credit approval can save you up to 15% on the purchase price of your home.

What will my monthly payments be?

The amount of your monthly payment depends on what loan program you choose. We like to provide our clients with an easy-to-read spreadsheet that narrows their choices down and compares different loan programs that meet both current and long-term goals. You will have the opportunity to select a program you feel comfortable with before you make an offer on a home.

What does it cost to get pre-approved?

Pre-approval is FREE! You have absolutely nothing to lose and everything to gain.

Give us a call to begin your pre-approval process. We have a network of Real Estate professionals ready to provide you with excellent service!

Call me directly for a free consultation.

Credit Tips That Will Score Lower Interest Rates

A good credit score translates into lower interest rates for home-shopping borrowers. In a mortgage lender's eyes, the higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans.

If this is you, don't panic. There are a number of things you can do to adjust your credit score to receive a favorable review from the underwriter. Here are a few suggestions:

Should I pay off all my past due balances and charge-offs?

This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items that are showing up on your credit report that are more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items that are more than two years old it can actually bring your credit score down, which is something we don't want to do. We want to bring that score up if it means you'll get a better interest rate on your loan.

Should I close existing credit card accounts that I don't really use?

No. Part of your credit score is based upon credit history. If you have old credit cards that you don't use very much, you still have the benefit of the credit history they represent.

Rather than trying to pay off all your credit cards, you can move part of the debt from one card to another to even out the distribution of debt. You want to try to keep the ratio of debt to credit limits at about 30% of the available credit or less. If your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.

When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.

What about errors on my credit report?

If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.

If there are items on your credit report that are less than two years old, send in your payment if possible and mark the back of the check with the following notation: "Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record." If necessary, the cancelled check will be proof that this should be promptly removed from your credit report if it interferes with the closing of your loan.