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Credit History

Your credit score and credit history are the most important factors in determining your ability to get mortgage
financing.  Without an adequate credit score it can be impossible to get financing.  Furthermore, your credit history and score are leading factors in the type of loan you will qualify for including the finance rate.

Get a copy of your credit history and credit score from all three reporting bureaus (Equfiax, TransUnion, and
Experian).  Review it to ensure no errors are being reported.   If there are errors or negative information showing take steps to have the information corrected or removed. We are happy to review this with you.

Work History

Steady employment for the last two years at the same job is the standard when applying for financing.  It is still possible to get financing with less than two years at your current job, especially if it’s the same type of work, but you will need to explain the reasons for change. Gaps in employment history and frequent changes in employers will also need to be explained.

Savings

The current standard for the best financing option is back to 20% down payment. There are some options available such as VA or FHA loans that will allow for as little as 0% to 3.5% down but these loans tend to have additional costs and restrictions. There are also special financing options with 3% down for properties that are owned by Fannie Mae or Freddie Mac.

Along with funds for a down payment and closing costs, you usually need savings “reserves” of 60 to 90 days
adequate to cover all of your monthly expenses.

Any large deposits in your saving accounts (60 days history is typically required) will need to be explained and
traced from their originating source into your account so the lender is sure you did not borrow those funds.

Cost of Ownership

Determining just how much house you can afford is an important budgeting factor.  Lenders typically want your total monthly debt to be under 33% of you monthly income (debt-to-income ratio).  It is possible to get a loan with higher ratios depending on your circumstances.  There are several calculators available to help you determine how much you can spend on a property

Prequalify with a Broker or Lender

Once you are prepared to start looking, get prequalified.  It doesn’t do much good to find the home of your dreams just to later find out you cannot qualify for the financing.  By getting prequalified, you will have a much better picture of what you can buy. We can assist you with your pre-qualification and purchase loan. As a broker, we shop the lenders and place your loan with the one that has the best loan program and interest rate to meet your needs. Complete your secure application here to get the process started. Here is a listing of the most common items you will need to provide. These may be uploaded securely into your online loan application.

Create your Wish List

Although you will most likely change your wants and “must haves” while searching for your new home, it is a good idea to create a “wish list” before you begin searching.  A wish list will give you and us as your REALTOR a good starting point. Your wish list should consist of items like location, size, bedrooms, bathrooms, etc… A good starter list can be found on the HUD website at http://www.hud.gov/buying/wishlist.pdf

Hire a REALTOR

All REALTORS are either a real estate agent or broker – but not all agents/brokers are REALTORS. As REALTORS we are members of the National Association of REALTORS and a member of one of the 54 state or territory associations. REALTORS must adhere to a strict code of ethics which is enforced by the local association. Searching for your home on your own can be time consuming and frustrating.  A competent agent will be able to work with you to find the right home for your needs.  Your buyers agent not only assists in locating the right property but will be instrumental in the buying process.  Contracts, disclosures, inspections, etc. are important parts of the buying process that we will be able to assist with. In case you are a first time buyer – the seller pays their listing agent a commission which is split with the buyers/selling agent. As a buyer, you do not pay this fee.

Searching for your home

The searching process can be a laborious task or it can be easy (and sometimes fun).  Be prepared and be organized. Utilize the website we will set up for you to save properties that you like and to make notes in the property file. Know the neighborhoods you’re searching in before searching – visit the local grocery stores and restaurants, review school ratings if that is important, etc..  When viewing houses, take notes and photos to help you remember it later. We will also be taking notes – but your own will be very helpful when reviewing what you did or did not like about the property.

Making an offer

Once you found the property that’s right for you it’s time to make an offer.  We will discuss the terms with you and draw up the contract for your offer and submit it to the seller/sellers agent. You should get one of three responses; acceptance, denial, or counter offer.  If an agreement is made its time to start your investigations on the property.  If for some reason you don’t come to an agreement, just remember there is always something else out there.

Getting your loan ready

We will now need to ensure we have all of your most recent income and asset documentation (some may need to be updated depending on how long ago you began).  We will provide your loan officer with the property and title information so your loan can be submitted for full underwriting to the lender (we broker to several lenders) with the best interest rate for your loan program.

Inspections

The inspection process will consist of reviewing several disclosures provided by the seller, a home inspection, and any additional inspection you may want.  The inspection period is the time for you to investigate the structural condition of the property.  Most often a professional home inspection and review of the seller disclosures is sufficient, but there are several types of inspections that can be completed depending on the properties particular situation.

Closing

After confirming that you are satisfied with the properties condition and your loan is ready to fund, its closing time.  Shortly before closing you will sign all the final documents including your loan paperwork and provide the remainder of your down payment and closing costs.  Once the lender/title/escrow confirm that everything is in order and all parties are ready, your loan will fund and the Deed/transfer or title will be recorded at the county. Then you get your keys!

Last week set all time record lows for mortgage rates in the United States. Factors in rates moving lower and lower over the past few weeks have been disappointing economic data and uncertainty about the health of European markets and banks.

Since investors move money from equities into bonds in times of uncertainty, the end result is that mortgage rates just don’t get any better than where they are at. This means that the question is not if, but when mortgage rates will move up. The general expectation is that when they do move up, they will do so swiftly.

The Ben Bernanke Watch is On

All eyes are on Ben Bernanke this week, with the widely held expectation that he will announce additional measures to help stimulate the economy. Bernanke will be speaking on Friday at the Kansas City Fed conference in Jackson Hole, Wyoming. In a spooked and volatile market like this, the week ahead may very well be jumpy as rumor and speculation about what Bernanke may or may not say are likely to abound.

Economic Calendar for Week of August 22, 2011

• Monday – Global Central Bankers Conference
  
• Tuesday – Redbook, New Home Sales
• Wednesday – Durable Goods Orders
• Thursday – Fed Balance Sheet, Money Supply, Initial Jobless Claims
• Friday – Ben Bernanke speaks, GDP, Consumer Sentiment

In the ideal world, it would be possible to spend a few days or even a few weeks living in the home that you intend to buy before you close the deal. This would allow you to learn all of the pros and cons of the home as it pertains to your lifestyle. In reality, this is not an option in a conventional real estate transaction, but that does not mean you cannot get to know your prospective home before putting in an offer to buy.

Doing Your Homework is A Must

Do your due diligence before you purchase so you know if you and your family are truly well-suited for the home. The following will help you ensure you make the right decision:

• Scout Out the Neighborhood – To get a feel for the neighborhood, you can tour the area and take advantage of new technology that can give you more information to work with. Google Maps now offers a ‘street view’ feature that allows you to see satellite images up close. By looking at the street view you will be able to see how well the neighbors take care of their homes (which can affect your property value), if there are neighbors with pools, and more. These are things that you may not see when simply taking a quick tour of the area in person.
• Verify the Sound Levels – If your prospective home is near a busy street, visiting at various times per day will help you determine just how noisy it will be. Remember to open the windows, particularly in the bedrooms. Sometimes in the excitement of looking at a beautiful home, obvious steps like this can be overlooked.
• Speak to People That Live Nearby – Typically, new neighbors will tell you everything you need to know about the area and more once you move in. They may be equally as open if you just try to initiate a conversation before you purchase. If you don’t feel bold enough to approach the neighbors, visit local stores and speak with the staff.

Scouting out the area and doing some homework before you make an offer is the closest you can get to trying before you buy, and it can ensure that you are satisfied with your decision for the long-term.

Time is running short for Congress to prevent FHA and conforming loan limits from reverting back to 2008 levels. The current limits expire Sept. 30 and will drop from 125 percent of the area media home price (and a top limit of $729,750) to 115 percent of area home price and a top limit of $625,500. If Congress fails to extend the limits and they drop, the real estate industry (which is united in opposing a drop) will certainly look for another opportunity later in the year to get them back up.

On Loan Limit Drop, Middle Faces Hard Hit.

Find out which cities have had the largest year-over-year increases in average list prices.

15 Cities Where Listing Prices Are Rebounding.

We are currently updating our site to be able to provide relevant and current Real Estate information.  While we muddle through the trial and error involved in creating a new site please excuse the mess.  Our Listings search is operational so please feel free to search the listings of San Diego County.

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