Why Do I Need to Talk to a Lender?

A question I often hear from buyers is, “Why do I need to talk to a lender?”

There are a number of reasons, the first being that you can find out how much of a home you truly can afford — based on monthly payments, not just the price of house.

On paper, you may be qualified for a house of $XX. There are some beautiful homes near that price! The problem lies within not knowing what that qualification means in terms of how much you’d pay per month, including taxes, insurance, and interest on the loan.

I recently had clients who could “technically” afford more than they were buying. Knowing their monthly limit (they still need to buy groceries, gas up their car, like to dine out on occasion, and meet up with friends for drinks!) helped them to make a very informed decision so they wouldn’t be “house poor.”

With the house we recently helped them get under contract, they will be closer to work (less gas fill-ups!), get the kitchen they wanted, and still be near the restaurants they like to frequent. And due to the monthly payments being within their budget, they can still dine there!

Other good reasons are: Your credit could have some issues that you were unaware of, and they can be fixed up front. My parents, when refinancing years ago, had my student loans on their credit, when they should not have been. My loans were enough debt that it could have affected their ability to get the mortgage — and all due to an error since my address had been the same as theirs until a few years before.

Your lender can let you know of any local programs you may qualify for, which could reduce your closing cost expenses..

Your lender can let you know if it may be beneficial for you to wait to buy based on your current circumstances versus potential in the future.

You can be ready to write a contract when you find the house of your dreams. Many Baltimore houses for sale have a requirement of a loan pre-approval letter or proof of ability to buy. If you don’t have that, you may miss out on that house while a qualified buyer gets it!

For more information and a referral to get a loan pre-approval, contact me. I have a number of lenders who I trust to serve my clients!

HUD Withdraws Offer/Statement on $8000 Tax Credit

On Tuesday I wrote about an exciting new program that HUD & FHA were rolling out to let the $8000 Tax Credit for First Time Homebuyers be used as a downpayment.

That has now been retracted, and the letter removed from the HUD site.

Yet Yesterday, HUD Secretary Donovan said that many states already were monetizing the tax credit, creating a so-called “Bridge Loan” where the money is loaned up front from the credit due down the line. This is, in essence, what the downpayment “credit” would come from. Here are more details from the National Association of Realtors conference where Donovan spoke.

Jeff Belonger, an FHA specialist ,wrote about it this morning, explaining the legal problems with the plan as proposed.

So not totally gone, but may not be available everywhere. OK, Maryland, are we going to be in? Can we get it done like Washington State has?

105% Refinance on Fannie Mae or Freddie Mac Owned Loans

Yes, believe it or not, you read that right. Tasha Linton, of Atlantic Home Equity Mortgage shared with our office that they are offering 105% Refi Plus on Fannie Mae or Freddie Mac Loans!

What’s the deal? Primary and investment properties qualify (no limit to amount of properties owned). You can refi up to 105% LTV with NO mortgage insurance.

Why? This initiative is part of the Making Home Affordable program announced on March 4, 2009. According to the Fannie Mae website:

The goal of the refinance initiative, as announced by the President, is “to provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.”

How do you know if you have a qualifying loan? You can check your qualifications right on the Making Home Affordable site, or call Tasha right away at 443-992-0783.

So what’s the catch? Well, you get limited cash out (which, in this market/economy makes sense). Also you must presently have no mortgage insurance. It is also currently only available until July 2009!

This is a great opportunity for those that have adjustable rate mortgages or interest only loans. This opportunity is not just for Baltimore homeowners, it is all over the US.

So take advantage if you are eligible. Here is YOUR bailout for being a conscientious homeowner!

Baltimore Housing Market Gaining Strength

Yes folks, you read that right, the Baltimore Housing Market is Gaining Strength.

What? What was that? The sound of glass breaking? Crashing to the ground in disbelief?

Well, believe it, and I have proof.

My phone, which, for awhile now, I will admit, I thought only made OUTGOING calls, has been ringing. A LOT. Since MONDAY. The spring-like weather? Maybe. The optimism of the new economic stimulus bill? Very likely!

All I know is that I had a house on the market last year in Hunt Valley that we removed from the market to have the home painted, “stuff” removed, and lay low for a little while. SINCE MONDAY I have received three phone calls — one from a perspective buyer, TWO from buyer’s agents who wanted to know, CAN WE SEE IT? When is it coming back on? (The great house: 11626 Hunters Run Drive – the photos will be updated once I get to take the new ones with the fresh paint, cleared out & staged rooms!)

Contracts are starting to flow in & out of my Timonium Real Estate Office. Baltimore Real Estate buyers are starting to realize that they need to get in NOW while the prices AND interest rates are LOW.

So, yes, I am optimistic and excited. There is SO much opportunity in this Baltimore real estate market whether in the Baltimore City real estate market, or the Towson real estate market, or even in the Timonium real estate market, and I urge buyers to take advantage NOW!

Baltimore First Time Homebuyers should buy NOW!

The New York Times writer Ron Lieber wrote an article that was published today called Maybe It’s Time to Buy That First House . Ron writes the Your Money section of the NYTimes online.

He knows his stuff!

Listen, we know that housing rates have been declining. There is no question. But are you waiting for the bottom to hit? If so, how can you predict it? You can’t! The likelihood is that you will either buy just before or just after the low. So why buy on the way back up? You’ll have missed what is likely to be a deal of your lifetime!

The other thing to remember is that most first time homebuyers tend to stay in their houses for 7-10 years. So you can SELL it on the way back up, rather than in the possible next dip!

Real estate is designed to be a longer term investment than the past few years have seemed to indicate. What we need to remember is THAT was the odd time. The scary time. When if you bought, we couldn’t honestly tell you that your house would be worth that much in a few years. And now, that’s right, it’s not.

So take advantage of these low interest rates, low prices, and deals galore!!!!!! Just check out the prices on these BALTIMORE homes! Don’t own a house yet — CONGRATS! Now do yourself a favor and BUY ONE NOW!!!!

Government Bailouts and Fairness to All

We have all heard about the banks being bailed out, the car makers possibly being bailed out, and those in financial crisis being bailed out. But what about those people who have been financially responsible? Why are those left out of the mix? How is that fair?

David M. Michonski, Chairman and CEO of Coldwell Banker Hunt Kennedy in New York City discusses this in RIS Media’s December 3, 2008 article, Solving Housing and Fairness in 48 Hours .

He has some very valid points and positive ways to solve the fairness issue. The problem is that others have to adjust their way of thinking as well, and that includes the banks who may be in trouble.

Read this excerpt:

“I suggest we change our thinking to focus on those who want to and can be stimulated, i.e. those many people sitting with cash on the sidelines and who are just afraid to act at this point in time. The economy may be sick, but there are still plenty of healthy people around. We need something to stimulate them to part with some of the cash they are sitting on.

How? Simple: give the healthy sector of the economy a bargain they cannot resist. Americans like a bargain and will act upon them.

What is a bargain? Give creditworthy buyers a 4% 30-year fixed assumable mortgage with no prepayment penalty. Creditworthy is someone with 20% down or 20% equity in their home, who has good credit and a verifiable job. Make it a new loan or a refinancing of an existing loan. Simple enough.”

GOOD THINKING! And can you imagine what that would do for the falling housing market?

There are many GOOD QUALIFIED buyers out there who have learned from the past to just wait. But what if we could convince them not to? How great would that be for our economy?????!!!!!! Plus, putting your money in real estate is, in general, safer and more profitable over time than the stock market. So why NOT?

Please, Banks, tell us why this has not happened yet. And hurry up and jump onboard.