Interest Rates Are Great – Is It Your Time To Buy?

If you have been thinking about buying real estate, now is a very good time to check in with your lender to find out if:

  • You qualify for financing,
  • How much you qualify for,
  • What timeline you need to close successfully on a home!

Interest rates are as competetive as we have seen them in a long time, which is great news for those that want to buy!

Please let me know if you would like a recommendation of lenders to contact for specifics. Then let’s set a date to get you looking at some homes! Email heidi@glassslipperhomes.com.

Fannie Mae’s New Enforcement On Strategic Defaults

With more than 5 million home owners unable to make their monthly mortgage or currently in default, lending giant Fannie Mae has started to get tough on strategic default.

At the end of June, Fannie Mae announced that it would no longer look the other way from borrowers who walk on their mortgage. They also announced that the penalty would be a seven year ban from the GSE (Government Sponsored Enterprise) program. Additionally, Fannie plans to take legal action against borrowers who strategically default on their loans.

While Fannie Mae is standing tough on their decision, the reality is that with unemployment still at 9.5% or higher in some regions and a sluggish economy is having many home owners feel that they have no choice but to walk away from mortgages that they have no hope of catching up on.

 “We’re taking these steps to highlight the importance of working with your servicer,” said Terence Edwards, Fannie’s executive vice president for credit portfolio management. “Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time.”

Here’s how Fannie breaks it out:

  • Deed-in-Lieu of Foreclosure> — reduced from four years to two years with 20% down; four years with 10%.
  • Pre Foreclosure Sale — two years with 20% down; four years with 10%.
  • Short Sale— will be the same as pre-foreclosure sale
  • Strategic Default (Walk Away) — seven years.

Many experts are fearful that this move will contribute to the already dismally depressed home market by cutting out the government backed borrowers. Fannie Mae and Freddie Mac, fund more than 90% of new mortgages and so far, Freddie has not followed suit.

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Home Loan Denials

The current real estate market is one that favors buyers. Record low interest rates, low home prices and a large inventory are all favorable for potential homebuyers looking for a new home. The problem facing thse homebuyers is that is obtaining financing for a new home can be a challenge in this difficult economy. Many mortgage lenders have tightened their requirements. However, it is important for homebuyers to realize that it isn’t always the lenders fault. Of course they would like potential customers to assume that they will be approved but the loan industry is a very risky one right now and they have to protect their assets. 

Many potential homebuyers are finding that their application has been denied, so if you have been denied recently or in the past for a loan, it’s time to take control of the situation. Educate yourself, ask questions and do your research to help change that NO answer to a YES answer! Here, to help you out are some suggestions.

  • Consider a co-signer if your income simply is not high enough to qualify for the actual loan. The co-signer’s income can possibly be considered as an amount towards your loan regardless if the person is living with you or helping you pay the actual bill. In many cases, the cosigner might also be able to compensate for your low credit. It is important however to understand that there are risks for your cosigner and if you default on your mortgage, the lender can actually in turn go after your cosigner for the full amount!
  • Wait it out.  Sometimes the best advice you can get, especially if the conditions in the housing market is slow or the economy is bad, is to simply wait. Oftentimes when conditions improve in the economy, the lenders will be more willing to let you “borrow” the money for your loan. While you are waiting, you can take this time to work on your credit score. While you are waiting, home prices could also drop!
  • Consider a less expensive property. We all want what we want, but you might have a better chance of being approved if you switch to a less expensive option. For example, if you wanted a house, but you cannot wait and you cannot qualify for the loan, you might consider switching to a smaller home or to a town home instead. Later on down the line when your financial situation improves, then you can trade up the property and move to the location and home you really want to.
  • Apply with a different lender. The world is full of lenders, if you don’t like what one says or you get denied – try someone else! However, if every single lender you go to denies you, you should become aware that it is for a reason – in fact, if they all list the same reason then you will know what you need to fix.  Use common sense and stay away from predatory lenders. We have heard some pretty scary stories about these places – so just don’t do it. You could literally be signing your life away.

If you are denied, it is important to not give give up and keep trying! Work on your credit and then in a few months try again! With a little time, patience and understanding, you could be able to turn the situation around to your favor!

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HAFA Programs From Fannie Mae and Freddy Mac

Everyone understands that we are in the midst of a difficult recession and  struggling economy and it is effecting people all over the country. The unemployment rate is steadily on the rise and has an astounding effect on the real estate market.  

Thousands of  home owners are feeling the pinch and struggling to make their monthly mortgage and many owe more than their home is worth.  A home owner in this situation usually finds that their best option is to do a  “short sale,” in which their lender agrees to accept less than a full payoff to release the mortgage. Short sales is a solid option to foreclosure, it alleviates financial and emotional strain for all involved

There are programs designed to help,  HAFA is a Federally sponsored program that provides incentives to lenders that agree to short sales. Because short sales typically are a lengthy process, HAFA is hoping to streamline and standardize the short sale process. Unfortunately not all home owners will be eligible and not all lenders that participate in the program.

Recently both Fannie Mae and Freddie Mac announced they will implement their own type of  HAFA Program and will be very similar to the original HAFA program. Their programs will work like this: distressed homeowners will need to apply for a mortgage modification under the federal HAMP program and the programs will then offer incentives to homeowners and lenders to complete a short sale such as  $3,000 in “relocation assistance” offered to homeowners for completing a short sale.

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