Is it Easier to Get a Home Mortgage Loan with a Broker or Banker?

Times are tough especially those trying to purchase a new home with blemished credit; so would life and loan prospects become easier if you were to trust a mortgage broker or a banker?

The interest rate will be the same whether you use a broker or deal directly with the bank but the broker knows all the latest greatest programs, specialty lenders, qualifying clauses and in’s and out’s to get you connected with a lender that can approve you.

You see, if you have “A” credit then you really can go just about anywhere you want to get a home mortgage loan. If you have blemished credit you have to hunt and track down that 1 lender who is willing to give you a home mortgage loan with a decent interest rate. A mortgage broker has the inside track on who will be willing to underwrite your loan and which lenders are a waste of time to even ask for a loan.

But there are downsides to mortgage brokers; many of them have a bad name because of predatory lending however, many of the programs and bad financing loans are no longer in play and were eliminated due to the financial downfall of many institutions. Additionally, once you supply all your information to the mortgage broker you will not deal directly with them anymore – the lender then takes the lead and the mortgage broker collects his/her commission.

Finally, the mortgage broker may not have your best interest at heart – it’s simply the commission that they are fighting for. Their job is to find you a home mortgage loan that you can qualify for; it may not be the best program for you and many times the mortgage broker will not explain all the if, and or what-if’s.

So again, how do you know if you should go to a mortgage broker or banker? Well first, to protect against the less reputable brokers select a member of the NAMB (National Association of Mortgage Brokers).

Next, take a look at your credit report and determine how “blemished” your scores really are; if below 620 you should probably think about a broker who can put you in contact with specialty programs and lenders willing to take more of a risk. If your score is closer to 700 then why not try a banker? Go ahead and contact a banker to start your application for a home mortgage loan and see what happens.

TEN TIPS FOR FIRST TIME BUYERS

Every year thousands of all homes purchased are by first-time homebuyers. While it can be a daunting task, owning your own home is very rewarding. Listed below are ten tips to help make the process less intimidating.

Consider the following:

1. Your credit: Poor credit will make you a much larger risk in lender eyes and a larger risk means higher interest rates and higher monthly mortagage costs. Make a point of paying your credit card payments, auto loans, rent, and other payments on time, all the time, and in full. In addition keep your credit card balances low. Higher balances mean higher risk in the eyes of the lender.

2. Taxes and Insurance: Keep in mind that in addition to your mortgage payment you will have to pay taxes and insurance. Sometimes this is not included in your mortgage payment and can be quite a shocker when you see how much it increases your total monthly payment.

3. What about the real estate agent: Real estate agents are at the center of most property transactions. It's important for you to know what an agent does, who is represented, and how the system works. Be sure to ask the agent who they work for, who pays them and what your obligations are.

4. Consider what location will work best for you: Look at your needs, the needs of household members, and your preferences in terms of commuting, shopping, recreation, and other factors that are important to you.

5. Plan on getting a home inspection as part of any offer you make: A professional inspection can help you understand the condition of the property and any potential hidden defects.

6. Talk to a lender: Get pre-approved by a lender so that you know how much you can borrow and what you can afford. There is a big difference between pre-qualification and pre-approval. Ask your Lender about the difference.

7. Save money: You'll need money for a down payment, closing costs, moving and other expenses. Do anything and everything you can to reduce expenses and save money.

8. What type of loan is best: Consider FHA, VA, as well as conventional loans. Work with your lender to determine which loan is best for you.

9. Grants, gifts and potentially free money: Many first time buyers receive gifts from relatives and friends. Some companies also offer grants and other incentives to employees who are buying a first home. Community groups may also have prograams and financing in place for first-time buyers, while the federal government has established special programs for teachers and police officers. Search for these and ask your Realtor for programs that they may be familiar with.

10. The time is now! Start the search process now. Talk with an agent and start looking at homes. Make a point to search the Internet on a daily basis. There has never been a better time to be a buyer than right now. There is plenty of inventory to choose from and plenty of deals to be had?

Choosing a Bad Credit Mortgage or Increasing Your Scores?

Many of you seek a bad credit mortgage instead of doing the obvious – fixing your credit and increasing your credit score. There is a simple strategy to qualifying for a mortgage after bankruptcy

· Establish new credit by opening up a secured credit card
· Paying bills on time
· Eliminating expenses that cut into your disposable income
· Put away and save a sensible amount of disposable income for your down payment

After a bankruptcy discharge you only need 24 months of good stable credit to qualify for a home mortgage loan.

You may very well run into problems again with money – all of us do at some point but the lesson here is to learn from your mistakes. If you couldn’t afford it before, eliminate it; get rid of it because that will be another black mark on your credit report.

The biggest downfall with obtaining a healthy credit score is not being honest and upfront about your financial status. Here is how you can avoid credit problems when you don’t have money to pay bills on time;

· Call your creditor(s) and make a payment plan; if you cannot afford the payments they put forth, explain your circumstances and ask them the best plan they can come up with. This way it will not be reported as a late payment to the credit bureaus.
· Cut down on your monthly expenses during hard times – if you refuse to turn the cable off, just eliminate your premium channels for a month until you get back on your feet. That will probably save you $25-30 dollars off your bill.
· Same with your telephone bill; if you don’t utilize long distance you can eliminate it for a month or two and re-instate it later on.

A bad credit mortgage will not help you in the long run – in fact, most lenders have done away with these types of creative financing programs and after the downfall stemming from these type of mortgage programs they probably won’t return any time soon.
Your quickest solution to obtaining a home if you’ve suffered from bad credit is to clean up your credit reports and take a higher road to financial freedom. A bad credit mortgage will not do this for you.

Shopping For a Home Online

Shopping for a home can be exciting as well as a little stressful. A new method that's become very popular of the past few years is shopping online. Shopping for a home online is the perfect solution for shoppers that are pressed for time. Shopping for home online can save you money and time when combined with a good buyer's agent.

The process for shopping for a home online is not all that different than if you were shopping the traditional way. The first thing you're going to do is determine what price range you'll be looking for. This is not the price range you'd like but rather the price range you can afford. There's no point in wasting your time on a home that you can't afford. Not to mention, whey get your hopes up for nothing? There are certain criteria you'll be looking for when searching for a home online, including finding a good buyer's agent to help you. These will include:

• Location- You'll need to pinpoint the region where you're interested in purchasing your home, whether it's a specific city or state.
• Type of home- Everyone's interests is different but you can narrow down your search to single-family home, co-op, multi-family home or condominium as well as the age of your desired home.
• Size and Price- Although everyone wants the largest home possible, you'll want to breakdown your search to what you need for you family as well as what you can afford. The size can be determined by number of bedrooms, baths or square footage. Any features you're interested in such as appliances, fireplace, swimming pool, etc. can also be entered into your search. Once you find a good buyer's agent, don't wast their time or yours by looking at homes you have no intention or capabilities of buying.

Once you've determined all the things you're looking for in a home, you can begin shopping for a home online. There are many Realtors with an online presence that can offer you many selections of home that meet your criteria. When you get to the site, you can enter all the data you've jotted down for your dream home. Many of the sites offer numerous pictures of the homes, inside and out. Sometimes the picture and descriptions are available for everyone to see while certain sites require you to register to their site and an agent may contact you by email if you're interested in any homes.

You can also choose to contact a real estate agent from the site to set up an appointment to see a home or learn more information about any homes that interest you. It cannot be stressed highly enough the importance of having a good buyer's agent. They have knowledge and experience to make home shopping fun and exciting. A dedicated agent will look for the best possible deal on the home of your dreams. You'll find that shopping for a home online can be very exciting and rewarding.

Options for Those Not Meeting HAFA Eligibility

The Home Affordability Foreclosure Alternative was introduce last November 2009 and went into effect April 1, 2010; it's an alternative to those who qualified for HAMP but for whatever reason did not complete the program and need to sell their home.

HAFA is designed specifically for conventional type loans to help homeowners streamline the short sale process and avoid a foreclosure. But again, here's a broken program that the government developed and left it up to the lenders to voluntarily participate in.

However, if a lender is participating in the HARP program then they must adopt the new HAFA program. What I think is positive with HAFA is that a homeowner who started out with the HAMP program but became delinquent on their new modification loan can now switch to the HAFA program and sell their home.

There are many borrowers who have defaulted on their new modified mortgage loan and ultimately face foreclosure again but HAFA gives you, sort of a second chance to avoid foreclosure.

What I do not like is, no matter what type of application you submit whether it's for HAMP, HARP or HAFA you're at the mercy of someone else accepting or rejecting that application. Applications for HAFA will probably be rejected much more that accepted; not because lenders don't want to readily accept a good deal but imagine the numbers that will overwhelm the banks? Every time you have such a high number of applicants for a program the lenders undoubtedly send out more resounding "NO's"!

To qualify for HAFA, Borrowers must meet these basic eligibility criteria

• Property must be borrower's primary residence
• The mortgage loan is the first lien originated before 01/01/09
• The mortgage is delinquent or default is reasonably foreseeable
• The current mortgage balance is $729,750 or less
• Homeowner's monthly mortgage payment exceeds 31% of their gross income

And the best news of all...lenders are expected to provide an approval letter 10 days from the date the offer is received - no more waiting on eggshells for months to get notification if the short sale has been approved.

Some Pointers You Need To Know About FHA Loans

FHA loans are federally assisted mortgage loans in the United States that are insured by the Federal Housing Administration. They are usually given to customers by federally qualified lenders or lenders that participate in the program. FHA loans have been known to help lower income Americans borrow money to purchase a home when they would not otherwise be able to.

The FHA programs were started in the era of the Great Depression to help with the financing of military housing as well as housing for veterans returning home along with their families. From the 1950's through the 1970's, the FHA helped stimulate the growth of many privately owned apartments for the handicapped, lower income Americans and the elderly. When the cost of energy and inflation threatened to kill the dreams of those looking for homes, FHA programs also came to the rescue of the many homeowners wishing to purchase homes at a time when there were threats of a deep recession.

FHA loans can help you in some of the following ways:

• Buying your first home


• Buying a fixer-upper


• Giving seniors financial help


• Providing FHA Energy-Efficient Mortgages


• Financing for mobile homes and factory-built housing


• Low down payments & low closing costs

Speak to your Realtor and Lender to see if an FHA loan is right for you.

Green Trends in the Housing Market

n 2007, construction of "green" housing was up 30% over 2006, and it appears that the affordable-housing sector is leading the way. The National Association of Home Builders (NAHB) is now saying that 2007 may have been a turning point in the green-home market. They are predicting that by the end of 2010 5%-10% of new home construction will be green. It will be a $38 billion market, they project.

The experts are predicting that the effect will be responded to by architects, contractors and suppliers, who will soon begin to shift their focus toward green design, which will only boost the momentum further. This upsurge in the affordable housing market is partially fueled by some environmentalists as well as some forward-thinking investors who stepped up to help finance this green movement. Prices for going green have come down as demand has increased. One other factor has helped fuel the green trend---the problem of mold in houses that have too much insulation. The improvements in ventilation technology as a result of the highly-publicized mold problems have also begun to appear in more modest homes.

Enterprise and the U.S. Green Building Council have joined hands to promote such things as education and training for building green. They are also working on ways to cut the costs of green affordable housing. Bank of America and the Home Depot Foundation have also been providing business leadership, financing, technical assistance and other resources to help advance the green trend.

There is now an interest in developing empirical evidence to show that green building is financially feasible and beneficial with the purpose of convincing mainstream financial institutions that they should be willing to get behind green affordable developments. It appears that the tide is turning toward green housing not just because it's the right thing but because it's also the smart thing. By building green, many of the environmental problems that plague society can be solved in the short term, and those involved in the movement claim that it just makes sense to take this direction toward meeting housing needs in the 21st century.

Some architects are getting on board. In custom-designed homes, the home buyer needs to ask for these features, but the architects can provide an analysis to determine which features are good investments, whether in new or renovated homes. In most cities, fuel-conserving homes qualify for energy-efficient mortgages.

Buying A Fixer-Upper Using HUD's 203(k) Program

This may be a way to get a bargain on a house but you need some facts before you take it on. You can find a property and the seller accepted my very low bid. The house will need a lot of work, but you feel that you're more than capable of fixing it up, so you buy it. Before long, you're in over your head and you're living in a home and repairing it sometimes years down the road, on top of which you probably won't even get your money back if you sell it.

Often a bank will not grant a mortgage on a house that is in bad shape until the repairs are complete and the repairs can't be done until you buy the house. Talk about Catch 22!

One way to go is to look into HUD's 203(k) program, which makes it possible to purchase a property and include in the loan the cost of the repairs and improvements. It is an insured-loan program that is available through approved lenders all across the country but is only available to people who will occupy the house. The down-payment requirement is 3.5% of the total cost, acquisition and repairs.

Here's some information about getting 203(k) loan:

1. Locate a fixer-upper and do a feasibility analysis with your real estate agent. Then enter into a sales contract that will stipulate that you are seeking a 203(k) loan and that the contract is only in effect contingent upon approval of the 203(k).


2. Find a lender who is approved by the FHA to grant these loans. You will need a proposal spelling out in detail the estimated cost of each repair or improvement.


3. Get an appraisal to determine the value of the property after renovation.


4. If you pass the lender's credit-worthiness test, you will have your loan. The amount of the final loan will include a contingency reserve of 10%-20% of the remodeling costs to cover any extra work that needs to be done.


5. You close on the property, the seller is paid, and the money for repairs goes into an escrow account.


6. Mortgage payments begin once the loan is closed.


7. Money for the contractor will be obtained through a series of draw requests; 10% percent will be held back by the lender to assure that the work will be finished and there will be no liens on the property.

For more information, go to:

http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

The Basics About 1031 Exchange

1031 Exchange refers to the section of the Internal Revenue Code Section that provides for the tax deferred exchange of real and personal property.

Simply stated, a 1031 exchange allows a person to "exchange" an investment property (be it business or a home) worth a certain number of dollars for another investment of "like kind". Since any profits have been reinvested into the new property, the taxes on those profits can be deferred until ultimately , the investor divests himself of the property. At that time, the grim reaper of reality shows up, and the deferred taxes along with any new taxes on the transaction become due at once.

Some general guidelines for a 1031 Exchange:

• The value of the replacement property must be equal to or greater than the value of the relinquished property less any selling expense.
• The equity in the replacement property must be equal to or greater than the equity in the relinquished property.
• The debt on the replacement property must be equal to or greater than the debt on the relinquished property.
• All of the net proceeds from the sale of the relinquished property must be used to acquire the replacement property.
• Constructive receipt of sales proceeds is prohibited during the exchange process.
• Deadlines for identifying and closing on the replacement property must be followed.

If a few or our grandparents/great-grandparents had known about the 1031 exchange, maybe the great depression could have been the so-so depression. It's a little known fact that this suddenly popular side route that allows an investor (and that can be a private individual as well as a broker) to indefinitely delay the payment of taxes when properties are exchanged without a profit, has been legal since 1921. Unfortunately, it took the housing boom to bring it to that attention of the Real Estate savvy, and the housing slump to open the rest of our eyes to what it can do.

However, it is important to realize that a 1031 exchange is not a ride on the tax-free gravy train. Eventually the investment is sold, hopefully at a profit. Then, the taxes on the first and last sale will have to be paid.