New short sale transaction rules established as a result of the federal government’s Home Affordable Foreclosure Alternatives program, or the HAFA, are designed to streamline the short sale process for those properties with sellers who have mortgages owned or guaranteed by Fannie Mae or Freddie Mac. Though the majority of these new rules only impact the sellers and lenders, many also affect short sale buyers.

If you are one of the many who have their eye on a short sale property, now is the time to review the short sale rules below and consider how they might affect you, the buyer.

Rule 1: Lenders must approve or deny the offer for the home within 10 business days of receiving the offer.

If you are at all familiar with short sales, you know that buying a short sale property is quite a lengthy process. Many buyers are forced to wait several months just to hear back on whether or not their offer was approved. With these new rules in effect, buyers will no longer be forced to suffer through long waiting periods. Lenders now have strict time lines for when the short sale offer needs to either be approved or denied. This is done to not only speed up the short sale negotiation period, but also standardize the way mortgage professionals handle short sale transactions.

Rule 2: Buyers must present documentation of funds or a pre-approval letter from a lender with their offer for a short sale.

When you’re ready to buy, you need to prove you have the financial backing to get the job done. Pre-approval is crucial. Work closely with your mortgage professional to ensure the documentation you need is ready to go so you don’t miss out on a short sale opportunity. Once you’ve handed the necessary documentation over to the seller, the short sale seller has three days to present it to their lender for review.

Rule 3: Settlement must take place within a reasonable period of time after the offer is made.

This rule also aids in expediting the typically sluggish short sale process. As a caveat to this new rule, the lender cannot require a closing earlier than 45 days from the date of the sales contract unless the home seller agrees.

We are here to make the mortgage process quick, cost effective and efficient. Keep in close contact with your mortgage professional by calling (866) 245-0946. This will ensure you receive feedback on your short sale offer as soon as possible.

Rule 4: Buyers cannot sell the property again for 90 days.

The HAFA program is not set up to accommodate those real estate investors looking to “flip” properties in order to make a quick buck. This 90 day rule was put in place to prevent sellers from purchasing the property at a low price and selling quickly at an inflated price.

Rule 5: Short sales transactions through the HAFA must take place at “arm’s length.”

Thinking about taking that short sale property off of your sister’s hands? Well think again. A short sale transaction must be done at “arm’s length,” requiring the seller to sell their property to an individual they do not know. This means selling to friends, family or anyone they might have a personal or business relationship with is out of the question.

As the housing market heals, expect to see more shorts sales for sale; especially since homeowners, lenders and government officials are determined to avoid foreclosures at all costs. But keep in mind, not all short sale properties will be governed by the HAFA program’s short sale rules. Those sellers with loans owned by lenders other than Fannie Mae and Freddie Mac will need to negotiate their short sale terms on an individual basis.

Call your mortgage specialist at 866-245-0946 to learn more about the HAFA program, or to be pre-approved prior to shopping for short sale deals.

The Federal Reserve has stopped buying mortgage-backed securities from Fannie Mae and Freddie Mac and is now returning control of interest rates to private investors. Amazingly, the Fed has purchased a whopping $1.25 trillion worth of mortgage-backed securities since the beginning of last year.

Now that the Fed is slowly backing out of the picture, many analysts believe mortgage rates will jump to 6% or so by year end from 5% in recent weeks, while others predict only a slight increase. But the truth of the matter is that what happens to interest rates over the rest of this year depends on many factors that are hard to predict, including the strength of the economy, Fed policies and foreign investors’ willingness to buy U.S. debt.

So what does this mean for you, the home owner?
If you’re a home owner who is looking to refinance or otherwise modify your loan, consult with our mortgage specialists soon and consider locking your rate. A rate lock will ensure that the rate provided when you begin the application process for the modification to your loan is guaranteed for a specific period of time (typically 30 days) while you complete the process. This protects you from over-paying for your mortgage should rates or costs increase during that time.

So what does this mean for you, the home buyer?
Just like the home owners who are looking to refinance or modify their loan, home buyers are in a frenzy to take advantage of the rates before they rise. If you’re in the market for a new home, be sure to contact our mortgage specialists first to ensure you’re pre-qualified and pre-approved for a home loan.

Those home buyers who are pre-approved will have, in hand, a conditional commitment from their mortgage professional for an exact loan amount, which will allow them to shop the homes that fit their price range. This also provides the buyer with a bit of bargaining power, as the potential seller is able to see that he/she means business and is ready to buy.

Meanwhile, federal tax credits available for some home buyers are due to expire at the end of April, adding to that sense of urgency buyers may be feeling. Sales are likely to spike throughout the rest of the month as house hunters move quickly to take advantage of the $8,000 tax credit for first-time buyers and $6,500 for move-up buyers.

Need to talk to a mortgage specialist now? Call 866-245-0946!

Bad credit mortgage loans are usually approved much faster than loans derived from banks and credit unions. However, the cost of these loans is usually much higher because the risk to the lenders is also greater. A higher rate of interest and a higher closing fee is the cost of acquiring a mortgage loan if you have bad credit. While this may not seem appealing to your financially savvy side, it’s much better than the alternative in a great majority of circumstances.

Checking the rates between the variety of lenders you have available to you can help save some money. Because interest rates associated with mortgage loans are at an all time low, you may be pleasantly surprised with the cost of acquiring one. Mortgage loans for people with superior credit ratings are incredibly low. So low that it’s a wonder they are available at the price you pay. Bad credit mortgage loans have become affordable to even the most financially unfortunate home owners.

Because bad credit mortgage loans are available to pretty much everyone, many carry what is called a pre-payment penalty. Not all carry this payment condition, but some do. If you do take out a bad credit mortgage loan with a pre-payment penalty, be aware of what this condition stipulates. If you choose to pay your loan off earlier than the terms set in the agreement, you will be charged an additional fee. Anywhere from 6 months – 3 years are the average lengths of time these loans demand as a time frame. They require this length of time so they are guaranteed to receive their interest fees.

Bad credit mortgage loans can save your financial existence entirely. Because rates are so low, you can make repairs to your home, get additional funding for side projects, or start a new business. While the options may not be as attractive as the full featured mortgage loans held by banks and credit unions, they still offer a great deal of benefit for anyone in dire need of the loan.

Save money for your family

Foreclosures are dominating the housing market; avoid being blindsided when hunting down real estate deals.

Everywhere you look there is a deal to be had as foreclosure properties continue to flood the market. If you are one of the lucky ones shopping for a bank owned bargain, the following five tips should provide you with greater knowledge and foreclosure buying power.

1. Don’t get caught up in a bidding war

Everyone has their eye on these hot home deals, especially as the banks continue to put these repossessed homes back on the market at bargain prices. Since you’re not the only one looking for a foreclosure bargain, you’ll run into a bit of buyer competition.
Instead of getting lost in the feeding frenzy, work with us at 866-245-0946 to calculate what you can afford and stick to that price. This will ensure you don’t end up like one of the many who has over-extended their financial capacity in a bidding war.
2. Tour property with a contractor

Oftentimes bank owned properties (or REOs) are not in pristine condition. Banks are looking for a quick sale so that they aren’t stuck with additional expenses such as property taxes, insurance, heat and electricity and so on. So more often than not you’ll find that REOs are sold as is.

A leaky roof or a foundation crack could be minor, or they could be a big deal breaker. When touring REOs, make sure to bring a knowledgeable contractor along who can assess the major and minor repair issues to ensure you’re not investing in a money pit.

3. Consider fixer-upper costs

In addition to touring the property with your contractor, you’ll want to make note of all the repairs your contractor brings to your attention. Replacing a sink, fixing the garage door, or tile in the kitchen are all fairly minor repairs, but these can add up. Calculate the cost to make these repairs and add it into the overall price of the property to discern if you’re looking at a bargain or a budget buster.

Remember, the bank has the upper hand when it comes to foreclosures. Don’t assume that you’ll be able to get them to cover the cost of the repairs of the home, because most likely they’ll pass you up and move on to the next bidder.

4. Work closely with your lender

Smart buyers keep in close touch with their mortgage specialist. Communication is key when establishing your mortgage package and bargaining with the banks. By keeping the lines of communication open with your our mortgage professionals, you can be sure your offer and transactions are timely and that you don’t miss out on any new deals.

5. Wait to make an offer

It may be difficult to wait when there are hot deals to be had, but sitting on the market for a while is in your best interest. By waiting to make an offer you allow others a chance to set the bidding tone. This allows you to get a feel for other bids before you jump in and make yours.

But don’t wait too long; time is running short if you’re one of the many who want to take advantage of the home buyer tax credits. To collect either the first time home buyer tax credit or the tax credit for those who are moving, buyers must have homes under contract by April 30. That means that both buyer and seller must have signed the purchase contract by that date. Talk to our mortgage specialist sto learn more about the credits and deadlines.

Mortgage: A Key to Home Ownership

A mortgage is a loan used to purchase a property. Using the property itself as the collateral value, the risk of losing the house to creditors usually guarantees the repayment of the loan. A borrower must be in agreement with the lien, or security interest, with the understanding that the house could be foreclosed upon in the event of nonpayment.

Mortgages are designed to allow you the ability to make a down payment on a house with subsequent payments after that. After a period of making payments on time, the house then becomes the property of the borrower. Other times, a house can be acquired with virtually no money out of pocket from the borrower. A mortgage is secured and the funding gets supplied to the borrower. Then, a borrower can use the mortgage funds to make home reparations that improve the resale value of the home. They can also use the funding to pay off the house entirely, thusly gaining a sustainable place to live.

Homeowners insurance, property taxes, mortgage insurance are three inclusions that you pay for in a typical mortgage. There can be other inclusions, but generally mortgages stick to these three premises.

You can put a mortgage on a home even if you don’t own it already. Some mortgage terms allow you to acquire a mortgage before you even own the home as long as you use the money to purchase the home in full.

Going to a bank, getting pre-approved for a specific amount, finding a house, understanding the closing costs, and using the mortgage funding to your advantage are what makes mortgages an attractive option for home owners and home buyers. Sometimes, you can even use the mortgage as a line of credit for whatever it is you want to buy.

Typically, home repairs, debt consolidation, and more are what mortgage borrowers apply their funds to. Acquiring a lower interest rate and tax credit is very important in the securing of a mortgage.

A house could end up costing you more money than it’s worth to live in. Homes with a mortgage that have high upkeep costs should be fixed up so they perform at optimal efficiency. Otherwise, the benefit gained from the mortgage funding could be drained away in a matter of years because of poor construction. This is one of the main reasons a great majority of mortgage borrowers participate in this form of lending in the first place: to improve their houses for resale.

If a homeowner fails to pay back the mortgage according to the terms set forth in the mortgage agreement, a foreclosure could take place. A foreclosure is devastating for any home owner without the financial means to bounce back from it. Sometimes, it can mean the end of a person’s financial livelihood altogether. Foreclosure should be avoided at all costs, with every available resource used to make the mortgage agreement work according to the terms set forth.

This is the right time to save money on your home. Not only that, you also get the opportunity to capitalize on all that equity in your home mortgage and save by reducing your current monthly home mortgage payment. You can use the extra money to purchase a new boat for those trips to the lake, upgrade your kitchen, or just break even in this economic slump.
Let’s face it though, most people are intimidated by the mere thought of qualifying for a home loan. It makes a scary process even more terrifying. So what do you do about it? Always research your mortgage options! Take your time and get the big picture, while not forgetting to look at the short term benefits. Your researching time should be spent looking for the most practical refinancing possible that suits your own unique situation.

Read up on mortgage rate predictions. Refinancing is based on key points, or indicators, in the industry. When the bottom fell out of the market, rates decreased considerably and now the industry is experiencing heated competition. Banks want you to refinance! You can secure your home and your sanity by being smart about your home mortgage. Now more than ever, refinancing is one of the best options for the average homeowner in Grand Rapids, MI.

However, as stated before, you need to be wise about it. Keep in mind that inflation directly affects mortgage rates and causes them to fluctuate.Supply and demand also play a huge part in the general direction that home mortgage rates tend to go. Even though these rates vary, they do not spike explosively even in the worst times in history. This means that you can learn to anticipate the home mortgage rates with just a little know how, but it’s always in your best interest to speak with your lender about refinancing before you jump in both feet first.

Always ask for the best rate, if you saw a better rate elsewhere, speak up! Many lenders will match competitive rates to keep you as a customer. Remember, this loan needs to suit you, not your lending company! The majority of loan officers work on commission. If they sell you a loan that makes the company more money in the long run, their commission check is higher! Be on guard for hidden fees in the loan. It is your responsibility to be candid with your loan officer. In some cases, lenders will offer you a rock bottom rate, but beef it up with fees, banking on the fact that most people simply don’t ask. Understand all the charges before you sign on the dotted line and make sure that the company you are working with is a solid reputable company that is grounded in customer service.

1. Obtain your Credit Report

This should be the number one item on your to-do list. On your credit report you will be able to see any information that may harm your chances of getting approved. Things to take into account are: late payments, delinquent or charged off accounts, high balance credit cards, etc… After receiving your report you are going to want to create a game plan to help improve your credit the best ways possible; which brings us to number two.

2. Improve your Credit Score

Let’s be honest here: very few people have perfect credit. Even people with good and great credit scores can be denied for a home loan. After pulling your credit report you are going to want to do a little bit of work to make sure your credit is in tip top shape. Some of the items that will raise a red flag to the mortgage company are going to be:

• High balance credit cards: Maxed out or close to limit credit cards look bad. These tell the banks that you cant afford to live off your current income. If you can’t afford your cost of living now, how will you be able to afford a mortgage payment? You want to pay off as many credit cards as you can; starting with the highest balance/interest rate first. It’s perfectly okay and even helpful to have a small balance on one or two credit cards. By small I mean keep it down to no more then 35% of the total available balance.

• Late payments: We have all done it, forgot to mail out the payment for one thing or another until the day after it is due. Unfortunately you cannot remove the late payment but you can hide it. The best thing to do to hide your late payments is to make sure you have a solid year of on time payments. Banks will see that you might have had a rough patch but you have straightened things out.

• Charge off/Collections: These are going to be one of the worst items on your credit report. If you are lucky you have never hit collections but a good many of us have. The best thing to do with these derogatory entries is to contact the creditor directly. Let them know that you want to work things out and settle the account. Most companies are glad they will get some of their money back; you should have no problem getting them to work with you.

• Inaccurate information: Banks will not know what is accurate and what is not, but you do. Look through your report and if anything at all shows inaccurate; file a dispute with the credit reporting agency.

3. Set a Budget

Mortgages are not cheap and banks will not loan money to you if your debt to income ratio is too high. The average debt to income ratio banks feel is acceptable is 36%. To figure out how much you can afford; take your total gross monthly income and multiply it by .36. The total will be your maximum allowable monthly debt. From that total, subtract any monthly debts you currently have. The remaining balance will be your maximum loan payment amount.

4. Find the Loan that is Right for You

A quick Google search will show you, there are many types of home loans available on the market. You need to determine which type of loan will fit your needs best. Do you qualify for FHA? Are you a first time home buyer? These are just some of the questions you will need to answer to determine what loan best suits your needs.

5. Save for a Down Payment

Unless you qualify for FHA, you will most likely need to come up some money down. Typically a bank or mortgage company will want 20% down, but if I were you I would research private mortgage insurance. Many companies will accept less down payment if you are willing to obtain insurance.

6. Shop Around

Mortgage rates and terms are set by the institution offering the loan. Look around to find the company that offers the type of loan you are looking for with the best rates available. Alternatively, you can go through a mortgage broker that has contacts with multiple banks and lending companies so they can do the leg work for you.

7. Gather your Financial Information

After all that hard work I would hate to see you go into the bank and have them turn you away because you don’t have the proper information. Due to the real estate crash, banks are very scared to lend money out to just anyone; you will need a lot of documentation to prove you can afford this loan. Information the bank will need is:

• Your W-2′s for the last two years.
• Contact information for your employers human resources department so they can verify income and length of employment.
• Your federal tax returns for the last two years.
• The last 30 days of pay stubs from your employer.
• The last three months of bank statements, as well as any investment information you may have.
• If there are any unusually large deposit on your bank account you will need to include a written statement explaining where the deposit came from and why.

These steps might take some time to complete, but once these steps are complete getting your loan will be a breeze.