Posts Tagged ‘how much can I afford’

An old wives’ tale comes true

June 24, 2010

I’m sure you’ve read or heard about things not to do when trying to get a mortgage that could disqualify you from buying or refinancing a home. You know what I’m talking about – a story that happened to someone somewhere, but could never happen to me…

I remember hearing a story of a couple that bought two luxury cars days before closing on their new home. Long story short – they no longer could buy the home!

Now it is doubtful that many of us would go out and buy one (let alone two) luxury cars right before closing. But that old wives’ tale may be coming true more often now than it ever has before.

I always warn my customers not to do anything in regards to credit once I’ve obtained a copy of their credit report. Don’t buy a car, don’t open a new credit card, don’t run up a higher balance on an existing credit card, don’t pay anything off or down if it isn’t needed to qualify. That advice is needed now more than ever thanks to Fannie Mae’s Loan Quality Initiative.

The purpose of the Loan Quality Initiative is to keep a close eye on any potential changes to a borrower’s circumstances from the application date to the closing date. Lenders will do this by pulling a copy of a loan applicant’s credit report up to the day of closing. This has always been a possibility – a random credit pull for quality control purposes – but now it is becoming standard practice.

If your credit report is pulled on the day of closing, and there is a credit account opened after your initial credit pull, your loan could be pulled back into underwriting to be reviewed before being allowed to close. If that happens, there will definitely be a delay in closing.

How can you prevent this from happening? Don’t do anything to your credit once you’ve been qualified for a new loan. Don’t apply for any credit, don’t let anyone make an inquiry on your credit report, don’t go out and purchase furniture or appliances on existing credit cards.

In short, don’t do anything until after you close on your loan. You’ve heard about the credit crunch, and this is simply another aspect of it. Remember this isn’t a single lender or bank’s guideline, but one from Fannie Mae. That means everyone will be subject to these new standards.

Have questions or comments? You know how to find me!

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3% down and no PMI

April 22, 2010

Yes, you read that correctly. Conventional loan, 3% down, no private mortgage insurance, and to top it off… no appraisal required! The program is known as HomePath Mortgage by Fannie Mae and is available to borrowers looking for a primary residence OR an investment property.

Investors using the HomePath Mortgage program need a 15% down payment, but will not be required to get private mortgage insurance or an appraisal on the investment property. Also, the limit on the number of total properties financed in an investors name is waived.

Fannie Mae designed this loan program to facilitate the sale of their foreclosures. There are numerous properties available, and you can search for them here. However, before you find a home and get ready to submit an offer, remember this is a foreclosed property and there are some things to keep in mind:

  • the property is purchased “as is”
  • the property may require some repairs
  • definitely get an inspection!
  • no contingency offers (on the sale of a current home) allowed

All offers must include a prequalification letter. If you are looking to get prequalified, learn more about interest rates this program, total monthly payments, etc., feel free to call or email me. It would be glad to help you through the mortgage process!

Here today…

April 8, 2010

The deadline for the tax credit is fast approaching. If you haven’t started the process, don’t worry, there is still time!

Unlike the first go around, you do not have to be closed by the deadline – you only have to be under a binding contract by the end of April. You then have 60 days (end of June) to complete the purchase.

This is ideal for all of those fence sitters out there! 🙂

For more details on the tax credits, check out this previous post. Some quick points:

  • First time home buyer (or not owned a home in 3+ years) tax credit of $8,000 extends through April 30, 2010. Home must be under contract by that date and closed on or before June 30, 2010.
  • A “moving up” tax credit of $6,500 is available for current home owners buying a new primary residence.  To qualify, home owners moving up must have lived in their current residence for 5+ years at the date of the binding contract to buy the new home.

If you have ever thought about buying a home to earn one of the tax credits, it isn’t too late to get started. Begin by talking with a mortgage professional, then find a home.

The tax credits are here today, but won’t be for much longer.

New blog feature

March 15, 2010

Introducing Meebo… Meebo is an instant chat application that is now integrated into my blog. Meebo will allow readers to ask me question about mortgages, blog posts, or anything else.

To use Meebo, find the box titled “ask a question” that is located on the upper right side of the blog. If you see “claygj is online“, then I’m logged in and will see your question. All that is left is for you to type and submit your private question.

This will be a quick and easy way for my clients, colleagues, and friends to reach out to me even if they don’t have enough time to call. Oh, and anyone working for a company that employs an office linbacker, don’t worry, it’s so discrete I doubt he will ever notice you sending me questions.