My Beautiful Sacramento

When it comes to purchasing their first home, many people will start looking at real estate ads, driving around neighborhoods, peeking in windows of vacant homes, and dreaming about finding the perfect home to move into.   It's magical, exciting and kind of scary since not everyone has a clear idea of where to start.  You want to pick the home that has what you're looking for and buy it.  Sounds simple enough.  Right? 

Buying a home in today's market can be a challenge.  With an abundance of short-sales and foreclosures up for sale and many buyers wanting to take advantage of low rates and great prices, it is a mad mad world in real estate right now.  You will be best served by getting yourself aligned with some savvy real estate professionals who can guide you through the process from the beginning and help you arrive at the finish line, a closed escrow, and keys to your new home.  Just getting an accepted offer is tough these days.  So you really do want to improve your chances by presenting a strong case.  What makes a strong offer?  An approved buyer. 

Strengthen your buying power by getting pre-approved for a home mortgage.  Pre-approval and prequalified are not the same thing. 

Getting prequalified is easy and will get you started.  Getting prequalified is to give the mortgage advisor your information. Then you can continue to get loan approval which will be getting all information verified before you find a property and save time since a purchase contract is usually contingent upon getting financing.  When you make an offer you will be at an advantage as the seller will know you are much closer to closing.  Once you find the right property you fill in the details and it becomes a full loan application. 

Before you start looking at homes you need to know what price range will fit within your budget.  Get started now.

First, your mortgage advisor will need to know your monthly income, length of time on a job and how much of your monthly income goes towards paying debts.  This is called the debt to income ratio.  There is a standard rule of a maximum top and bottom number which is just as important as your fico score on your credit report.  The debt to income ratio varies with the type of loan product you will be getting.  For example for a conventional loan the standard ratio is 28/36.  It may be slightly higher for FHA or VA loans. 

The first number is the maximum percentage of your gross monthly income that the lender will allow for housing expenses. The total includes payments on the mortgage loan, mortgage insurance, hazard insurance, property taxes, and homeowner’s association dues.  The second number includes your housing expense plus any recurring debts such as credit card payments, auto loans, child support or any other long term obligations. 

Take note of this!  If you are planning to purchase a home, now is not the time to buy a new car or make any major credit card purchases.  Even if you are in escrow, do not purchase a washer or dryer or anything for your new home until after you have closed escrow and received the keys to your home.  People have ruined their chances of getting a home loan because they made credit card purchases during the escrow process.  A new credit report is usually issued before the loan funds.  You must be within the guidelines of the debt to income ratio. 

Next, your mortgage advisor will need to determine your loan to value ratio.  They need to know how much cash is available to cover any down payment, closing costs or prepaid items such as taxes and insurance and how much cash reserves will remain in your accounts after your purchase.  This will also help you determine the kind of loan program that is best for you.  Some loan programs allow the seller to pay a percentage of the closing costs and there are also home buyer assistance programs available. 

Once your mortgage advisor gets this information they can educate you about the loan products and services that will fit with your debt to income and loan to value ratio.  Now you are ready to decide what type of loan you will be getting, such as FHA, VA, Conventional; your interest rate, down payment, and how much cash you will be bringing to the closing table. 

Your mortgage advisor will issue a prequalificaton letter for you to give to your real estate agent.  This will let the real estate agent know that not only are you serious about buying a home but that you qualify and you are able to close the escrow.  It will also help your real estate agent when they present an offer to purchase a property on your behalf. 

The seller may have more than one offer on a particular property and when this happens the seller will look at each offer and consider the down payment amount and the type of financing that the buyer is getting.  The seller is usually most interested in choosing a buyer who can close the transaction.  Presenting a buyer with an approved loan will help seal the deal.

Are you ready to buy a home in the greater Sacramento area?  Do you want to present a strong offer that gets accepted?  There are several ways I can help you get started.  Click here to visit my website.

Photos by BigStockPhoto.com

Saving Your Home From Foreclosure - Home Loan Modification or Short Sale

Well, it has been a couple of months since I wrote my article, Home Loan Modification - Is it possible?

At the time I was terribly frustrated with what I was hearing from those seeking assistance and getting no where.  I wonder if there have been any significant changes to the system that is supposed to help people who desperately want to remain in their homes.  I say, don't give up.

Whatever your situation may be, don't just walk away.  The first place I would visit is: 

www.MakingHomeAffordable.gov.

If they are unable to help you, the second thing I would consider is a short sale.  At least with a short sale there are some benefits that are better than the alternative, which is foreclosure and all the pitfalls that go along with it.  You can still do a short sale if you are current on your mortgage payments. 

I have an excellent resource for information about short sales.  Here in the greater Sacramento area we have a short sale guru.  Her name is Elizabeth Weintraub.  I don't know Elizabeth personally but I have had some interactions with her on the Active Rain Real Estate Network.  We often read and comment on the same blogs. She is also a writer at About.com and specializes on short sale information. 

People who live in the greater Sacramento area often contact me asking for mortgage help.  When they owe more on their home than it is worth, all I can do is offer them resources.  I wish I could do more.

So, now you have two things you can consider before foreclosure.

Here is a good video that explains HOW to go about getting a home loan modification.