Ready to Buy? What Should I Do?

Getting preapproved for a home loan is the first step you should take before searching for a new home. If you haven’t already been pre-approved for a home loan, make sure you get pre-approved before searching for a home or contacting a real estate agent so you have an idea of what you can afford and what you should (or should not) be looking for.

Around 80% of all home searches begin on the Internet. Through all the resources available, homebuyers can conveniently search through hundreds of online listings, view virtual tours, and sort through dozens of photographs and street views of neighborhoods and homes. You've probably defined your goals and have a pretty good idea of the type of home you want. By the time you reach your real estate agent's office, you are halfway to home ownership.

Good real estate agents will listen to your wants and needs and arrange to show you only those homes that fit your particular parameters. Your agent should preview homes before showing them to you as well. If you are a motivated buyer, it shouldn’t take too long for you to find your new home.

When rating the inventory of homes you are shown:

• Bring a digital camera and begin each series of photos with a close-up of the house number to identify where each group of home photos start and end.




• Your agent can provide you with a print out of the listing for you to make notes on. Ask for a listing print out for every home you view to help you stay organized.




• Take notes of unusual features, colors, and design elements.




• Pay attention to the home's surroundings. What is next door? Do larger homes tower over your single story? What is the parking situation like if you want to have guests over? Does the neighborhood seem well kept?




• Do you like the location? Is it near a park or a power plant?




• Immediately after leaving, rate each home on a scale of 1 to 10, with 10 being the highest.

When you know how to start your search for a new home and you have a good agent to assist you, the home buying process should be enjoyable, and you can feel confident in your decision.

Troy Batson is a licensed broker in the State of Oregon ~ troybatson.com ~ Duke Warner Realty ~ 1033 NW Newport Ave. Bend, OR 97701 ~ (541)382-8262

Mortgage Standards Rising

The National Association of Realtors (NAR) recently reported that existing home sales increased in March, which is good news. However, while homes might be more affordable right now, qualifying for a mortgage loan requires higher standards than it did 5 years ago.

Because Fannie Mae, Freddie Mac, and the FHA cannot guarantee mortgages over the conforming loan limit, mortgages over the limit will face higher interest rates and tighter restrictions. Fannie Mae increased costs for borrowers with lower credit scores, less home equity, and second mortgages when it changed what it calls its loan-level price adjustments.

Many consumers today are facing credit problems due to unemployment, under-employment and lower home values, but credit score requirements remain high. While a 580 credit score was acceptable a few years ago, Fannie Mae and Freddie Mac require at least a 620 score for all programs except the Home Affordable Refinance Program (HARP). FHA home loans require a minimum credit score of 640.

Debt-to-income (DTI) ratios, which entail your monthly debt payments relative to your income, are still required to be high as well. Fannie Mae used to allow DTIs up to 55 percent but now typically requires at least 45 percent. Freddie Mac wants at least 50 percent DTI. To compute your DTI, divide your monthly debt payments, such as credit card, car loan, and other loan payments, by your gross monthly income.

Home loans with no down payment have all but disappeared. The minimum required down payment when buying a primary home is typically 3.5 percent of the sales price, which will allow you to get an FHA loan. Conventional loans typically require 5 percent to 10 percent down.

Home loan qualification standards will likely remain high for now, so plan carefully if you’re considering a new home purchase. Focus on improving your credit score, saving up for a down payment, and lowering your debt-to-income ratio, and you can be on your way to owning a new home. Contact us to discuss your options.

Troy Batson is a licensed broker in the State of Oregon ~ troybatson.com ~ Duke Warner Realty ~ 1033 NW Newport Ave. Bend, OR 97701 ~ (541)382-8262

FHA Mistakes to Avoid

When buying your first home, there are many mistakes that can cost you thousands and hinder the process to get you into the home that is right for you.

One long-standing program that has assisted millions of first-time homebuyers is the FHA (Federal Housing Administration) mortgage program. An FHA loan is a loan the government agency insures against default. Approved lenders can issue these loans, which tend to be less restrictive to borrowers facing economic hardship.

Here are a few common mistakes to avoid when considering an FHA loan for your first home:

Failing to consider an FHA loan. If you are thinking of purchasing a new home, considering an FHA mortgage could be a vital step. The FHA program allows lenders to offer home loans to borrowers with limited or less-than-perfect credit histories. While FHA mortgages require that you pay a mortgage insurance premium, FHA mortgage rates could be lower than you would get otherwise.

Making a major credit purchase immediately prior to applying for a loan. Your debt-to-income ratio is a major determining factor in whether or not a lender will approve your loan application. Your debt-to-income calculation is based on your current debts and the percentage of that debt against your income. Major credit purchases will seriously alter that ratio sometimes enough to significantly hurt your chances for obtaining an FHA loan. You can also improve your debt-to-income ratio by paying off credit card balances or other outstanding loans.

Not reviewing your credit report. An FHA-loan approved lender will always look at your credit report and credit score. Your credit report gives the lender an idea of your debt, your ability to pay your bills on time, and your overall credit reliability. Before you apply for an FHA loan, review your credit report and score. It could contain errors that could affect your ability to purchase a home. Once you’ve carefully reviewed your credit report and are confident in your credit history and score, you should initiate the preapproval process.

Neglecting to save enough money upfront. While an FHA loan generally requires a lower down payment than other loan types, there are still upfront costs involved in an FHA mortgage. Ensure that you’ve budgeted carefully and saved enough for the necessary down payment. There are also fees and expenses due at closing for things such as mortgage processing, insurance, home inspection, and lawyers. Make sure you have a generous amount of savings above and beyond your down payment to cover any closing costs and upfront expenses.

FHA loans have helped countless homeowners in the past. An FHA mortgage may be a good fit for you as long as you avoid these common mistakes.

Troy Batson ~ Broker Duke Warner Realty 1033 NW Newport Ave Bend, Oregon 97701 541.678.3725 or 541.382.8262 troybatson@dukewarner.com troybatson.com

Cash, Conventional or FHA?

Some people want to know whether they should apply for an FHA loan or Conventional loan. Some people ask if cash buyers have more power.

Well to put it simply, without really having to say it, CASH WINS!...most of the time. Obviously if the FHA or Conventional buyer has a much higher offer, that bank or homeowner is more likely to entertain it. But not always.

When a buyer comes in with cash it shows that they have the funds to close and will not have many condititions to meet before they can close.

A Conventional loan buyer has more power than an FHA buyer because he/she is putting down 20% of the sales price. So a seller knows that the buyer has more interest in the property and is perhaps a more solid buyer. They are less likely to fall out of escrow.

FHA is the hardest due to the fact that FHA buyers have to go through a rigorous, and I mean rigorous, process to get qualified. Sometimes a buyer is not always honest about their financial situation when qualifying for a loan. So when they receive their prequalification it may be on false terms, the loan will not be approved and the buyer will lose that property. Unfortunately this costs everyone time and money, including the buyer.

So if you are going to apply for a loan always be completely honest to the loan officer because they will find out everything about your financial situation.

Conventional is stronger and remember, CASH WINS.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com

Do I need to get a Mortgage Pre-Approval?

While it's true that mortgage lenders are tightening the purse strings, home loans are still out there and readily available to those who qualify. The only way you will know if you do qualify is to seek a mortgage pre-approval.

A mortgage pre-approval will help: 

• confirm your eligibility for a home loan


• establish a price range


• give you confidence in the home buying process


• reassure home sellers of your ability to secure a loan

Your loan application information will be the basis for your mortgage pre-approval. Lenders will also weigh heavily three credit reports and income verification. Before you shop for a mortgage pre-approval, review your own credit history. Determine what you can comfortably afford to pay for housing including taxes and insurance.

Before you visit a lender, or fill out a loan application, check your credit report for potential problems. Your credit score will help determine whether or not you get a loan, the terms of the loan and the interest rate you will pay.

Federal law entitles you to one free credit report in a 12-month period from each major credit reporting agency. Get a free report at www.annualcreditreport.com. Check the report for errors and resolve errors before you apply for a loan. You can also call the three major nationwide consumer credit reporting companies for your free report:

• Equifax: 1-877-576-5734; www.equifax.com


• Experian: 1-888-397-3742; www.experian.com/fraud


• TransUnion: 1-800-680-7289; www.transunion.com

Mortgage Pre-approval vs. Mortgage Pre-Qualification

A mortgage pre-approval is not the same as a mortgage pre-qualification. Many people confuse the two terms. A mortgage pre-qualification is the first step to getting a mortgage pre-approval. 

During the mortgage pre-qualification process, a mortgage lender will evaluate your financial status based on information you give over the telephone or internet. It does not usually require an application fee or require you to substantiate income and expense claims. The lender will determine how much you are likely to be able to afford for housing. It is important to be completely honest with your lender and yourself during this process. 

A mortgage pre-approval is more formal. It will require fees including an application fee and a credit report fee. You will be asked to provide documents to verify employment or other forms of income. The mortgage lender working on the mortgage pre-approval will pull your credit reports and review your credit history. Mortgage pre-approval is a better guarantee of your eligibility than a mortgage pre-qualification. 

Mortgage Pre-Approval Gives You Bargaining Power

Home shoppers are often disappointed when they are turned down for a loan. Home sellers suffer too when their intended buyer is not able to secure a loan. Sellers are wary of buyers who may not qualify for a home loan. A mortgage pre-approval will give you bargaining power.

Our company has a vast network of lenders and other real estate transaction support services. Contact us today for help getting pre-approved for a home loan.

Troy Batson ~ Broker
Duke Warner Realty
1033 NW Newport Ave
Bend, Oregon 97701
541.678.3725 or 541.382.8262
troybatson@dukewarner.com
troybatson.com