7 Tips for Buying Your First Home in the U.S.

Article From BuyAndSell.HouseLogic.com

By: Dona DeZube
Published: April 09, 2013

Help finding your way through the complex U.S. real estate market.

Nothing says you're truly an American like owning a home. And just over half of all foreign-born households living in the U.S. own their own home. If you're ready to join them, try these seven tips for American-style home buying success - the process here may be quite different from what you're used to.

1. Be ready to prove who you are. You don't have to get your citizenship, a green card, or any particular type of visa before you buy a home. But you do need:

          •An Individual Taxpayer Identification Number. (http://www.irs.gov/Individuals/General-ITIN-Information) That's a number assigned by the Internal Revenue Service to foreign nationals who need to file income tax returns. 

         •A valid foreign passport, or two or more current photo identifications, such as a driver's license, to show who you are.

Although property ownership isn't tied to immigration or visa status, there are rules about how long you can stay, so if you're not a citizen, check out U.S. visa requirements before you purchase.

  

2. Plan to get a mortgage, so you don't have to save your money for years to become a home owner and start building equity. The U.S. home loan market offers many safe, affordable mortgages, including ones that allow Muslims to buy a home without violating Islamic laws against paying interest.

To get a U.S. mortgage, you must establish credit and earn a good credit score (http://www.houselogic.com/home-advice/home-loans-mortgages/how-fico-credit-scores-work/). To boost your score:

          •Open U.S. bank and credit card accounts.

          •Report all your income on your tax returns. Lenders use tax returns to verify your income and decide how much you can afford to borrow to buy a home.

When it's time to apply for a mortgage, you'll find major banks with global operations have experience working with foreign buyers and tend to have a process for verifying credit established in other countries.

3. Work with a REALTOR® who is a Certified International Property Specialist (CIPS) and who has experience, training, and education in helping foreign-born home buyers. An experienced real estate or title attorney can help you protect your interests, too.

Tell your REALTOR® how the home buying process works in your native country and ask her to explain U.S. home-buying customs to identify any differences. Even within the U.S., local differences exist in how people buy and sell homes. Knowing how homes are sold here and what to expect with closing costs, inspections, and the negotiation process (http://www.houselogic.com/articles/negotiate-best-house-buy/) reduces your stress and helps you get a good deal on your first home.

4. Don't be shocked by Americans' casual attitudes toward buying or selling real estate; it's a byproduct of the relaxed U.S. business culture. Although real estate contracts must be in writing, the process leading up to the sales contract signing may be more informal and casual than it would be in your home country.

5. Learn to convert from the U.S. standard measurement into metric, or pick up a metric converter app so you can better estimate room and home sizes while shopping.

6. If you're not fluent in English, or prefer speaking in your native language, choose inspectors, mortgage bankers, and REALTORS® fluent in your own language. Although it's possible to get translated copies of standard real estate documents, you'll likely have to sign the English versions during your home purchase.

7. Consider all the real-estate related expenses you'll have as a home owner, including property taxes, home owners insurance, and maintenance costs. Set up a financial plan for your home (http://www.houselogic.com/home-advice/home-loans-mortgages/home-financial-planning/) so you know how much money to set aside for ongoing expenses.

Help for Homeowners Who Are Behind on Mortgage Payments

Article From HouseLogic.com

By: Donna Fuscaldo
Published: June 14, 2013

The Making Home Affordable program offers at-risk homeowners a chance to modify mortgages to avoid foreclosure on their homes.

If you're behind on mortgage payments (or about to be), which is putting you at risk of foreclosure, the Home Affordable Modification Program (HAMP) could be your lifeline.

Making Home Affordable, the federal program aimed at aiding struggling home owners, offers two options: refinancing (known as HARP (http://www.houselogic.com/home-advice/refinancing/harp-refinancing/) ) and loan modification, which this article explains.

Unlike refinancing, HAMP pays your current lender to rework your existing loan terms to lower your monthly payments.

But don't expect to breeze through the qualifying process. You'll need a lot of documentation and patience.

Qualifications for HAMP

          •Your home must be your primary residence.

          •You must owe $729,750 or less on a first mortgage that was originated on or before Jan. 1, 2009.

          •You must also demonstrate financial hardship - such as a jump in mortgage payments or a drop in income.

A loan modification makes sense if you can't afford your current mortgage payment but could manage to stay current if your monthly payment were lowered. Homes of up to four units are eligible, with higher loan limits, as long as you occupy one of the units. HAMP is scheduled to expire at the end of 2015.

If you've failed at a prior loan modification, you may still apply for HAMP, so don't let an earlier bad experience deter you from applying again.

The First Steps to Getting a Loan Modification

HAMP begins with a trial phase. Contact your lender to initiate the process, or call 1-888-995-HOPE to get free assistance from a housing counselor approved by the U.S. Department of Housing and Urban Development.

The lender will calculate a lower monthly payment, which you must make on time for at least three months. After successfully completing the trial phase, your lender should make the loan modification permanent.

While lenders may accept some undocumented information up front to begin the process, eventually you'll need to file detailed paperwork to earn a permanent modification. It's better to get your documentation ready in advance. HAMP administrators say the leading reason trial modifications fail to be made permanent is missing paperwork. ??Start by gathering paperwork on:

          •Your income (pay stubs)

          •Expenses (mortgage statements, tax and insurance bills, debt balances)

          •Assets (bank and non-retirement savings statements)

You'll need that information to fill out the Request for Modification and Affidavit (http://www.makinghomeaffordable.gov/get-assistance/request-modification/Pages/default.aspx).

You also need to complete IRS form 4506T-EZ (http://www.irs.gov/uac/About-Form-4506T-EZ), which allows your lender to review your income tax returns.

File a Hardship Affidavit (https://www.fanniemae.com/content/guide_form/1021.pdf) as well.

If possible, send all documents together in one package by certified mail to your lender. That will lessen the likelihood of lost paperwork and delays, says Nicole Hall, editor of LendingTree.com.

How Your Mortgage Payments Get Lowered

A lender can modify a mortgage in several ways:

          •Lower your interest rate

          •Reduce your principal

          •Extend the term of the loan

The basic goal is to use one or more of these approaches to get your monthly mortgage payment, including real estate taxes (http://www.houselogic.com/home-advice/property-taxes/property-tax-appeal/) and homeowners insurance premiums, down to a more affordable payment. Lenders are allowed to cut your interest rate to as low as 2%, if necessary. The average HAMP modification has reduced monthly payments by $546.

To get a ballpark figure of how much a modification might lower your monthly payment, run the numbers for yourself. If, for example, your current mortgage payment is $2,000 and your monthly gross income is $4,000, then you're paying 50% of your pre-tax income toward the home loan. A typical modification to bring that figure down to 31% would reduce the payment to $1,240, a savings of $760 a month.

If You're Already Facing Foreclosure

Even if you're already facing foreclosure (http://www.houselogic.com/guide/foreclosure-faq/facing-foreclosure/), HAMP is worth a shot. The foreclosure process is suspended while you're in the trial phase of the modification.

Foreclosure can be avoided altogether if you can demonstrate the ability to keep up with the new, lower payment and graduate to a permanent modification. Keep in mind that the foreclosure process can resume if you miss payments during the trial phase or fail to get approved for a permanent modification.

Some owners won't be able to stay in their homes, even with a mortgage modification. To avoid foreclosure (http://www.houselogic.com/guide/foreclosure-faq/facing-foreclosure/), look into the federal Home Affordable Foreclosure Alternatives (http://makinghomeaffordable.gov/hafa.html) program.

HAFA offers lenders financial incentives to opt for a short sale (http://www.houselogic.com/home-advice/facing-foreclosure/foreclosure-alternative-short-sale/) or deed-in-lieu (http://www.houselogic.com/home-advice/facing-foreclosure/foreclosure-alternative-deed-lieu/) rather than a foreclosure. ??In a short sale, a borrower sells a home for less than the outstanding mortgage, and the lender takes the proceeds and considers the debt paid off. In a deed-in-lieu, the homeowner turns over the home to the lender, and the mortgage is closed. Although neither option is ideal, either can make sense if a loan modification isn't attainable or sufficient.

Learn more about stopping foreclosure from our Foreclosure FAQ. (http://www.houselogic.com/guide/foreclosure-faq/)

Foreclosure rate retreats from record high | Inman News

MBA: Improvement in performance of 2005-07 loans
By Inman News
Inman News™
Date: Thursday, May 19, 2011

The percentage of homeowners with mortgages who were in foreclosure or seriously delinquent fell during the first three months of the year, and improvement in the performance of loans taken out from 2005-07 suggests a sustainable trend, the Mortgage Bankers Association said today in releasing its quarterly National Delinquency Survey.

The serious delinquency rate -- the percentage of loans in foreclosure or delinquent by 90 days or more -- was 8.1 percent during the first quarter, down from 8.6 percent during the last three months of 2010 and 9.54 percent a year ago.
The percentage of mortgages in foreclosure was 4.52 percent, down from a record high of 4.64 percent in the fourth quarter, and the percentage of loans behind by 90 days or more dropped for the fifth consecutive quarter, to 3.58 percent.
"Of particular importance is that the drop in the percentage of loans 90 days or more past due was driven by improving numbers for loans originated between 2005 and 2007," said MBA chief economist Jay Brinkmann, in a statement.
See the rest of the article at:
http://www.trendmls.com/Guest/News/IndustryNewsShowDoc.aspx?InmanId=143436

Qualified Residential Mortgage Harms Home Buyers With Good Credit and Housing Recovery

In the midst of a very fragile housing recovery, the government is throwing a devastating, unnecessary and very expensive wrench into the American dream. First time homebuyers will have to choose between higher rates today or a 9-14 year delay while they save up the necessary down payment. And 25 million current homeowners would be locked out of lower refinancing rates because they lack the required 25 percent equity in their homes.

High down payment and equity requirements will not have a meaningful impact on default rates. They will, however, require millions of consumers, who are at low risk of default, to either put off buying a home or pay unnecessarily high rates. The government is penalizing responsible consumers, making homeownership more expensive or simply out of reach for millions. Regulators need to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers.

As part of the financial reform legislation, Congress designed a clear framework for improving the quality of mortgage lending and restoring private capital to the housing market.  To discourage excessive risk taking, Congress required securitizers to retain five percent of the credit risk on loans packaged and sold as mortgage securities.  However, because across-the-board risk retention would impose significant costs on responsible, creditworthy borrowers, legislators also created an exemption for “Qualified Residential Mortgages,” defined to include mortgages with product features and sound underwriting standards that have been proven to reduce default.

Unfortunately, regulators have drafted proposed Qualified Residential Mortgage (QRM) rules that upset the important balance contemplated by Congress.  Rather than creating a system of penalties to discourage bad lending and incentives for appropriate lending, regulators have developed a rule that is too narrowly drawn.  Of particular concern are the provisions of the proposal mandating high down payments.  Other aspects of the proposal – such as the proposed debt-to-income ratios and credit standards – will also raise unnecessary barriers for creditworthy borrowers seeking the lower rates and preferred product features of the QRM.  

The proposed QRM exemption requires a high down payment – proposed at 20 percent, with even higher levels of minimum equity required for refinancing – despite the fact that Congress considered and rejected establishing high minimum down payments because they are not a significant factor in reducing defaults compared to other underwriting and product features.  In fact, the three sponsors of the QRM provision have sent letters to the regulators saying that they intentionally did not include down payment requirements in the QRM.

Requiring down payments of 20 percent or more is deemed by some as “getting back to basics.” However, well-underwritten low down payment home loans have been a significant and safe part of the mortgage finance system for decades.   The proposed QRM exemption ignores these data and imposes minimum down payments of 20 percent, and equity requirements for refinancing borrowers of 25 percent or 30 percent.  

As a result, responsible consumers who maintain good credit and seek safe loan products will be forced into more expensive mortgages under the terms of the proposed rule simply because they do not have 20 percent or more in down payment or equity.  In other words, the proposal unfortunately penalizes qualified, low-risk borrowers. The QRM should be redesigned to align with Congressional intent: encourage sound lending behaviors that reduce future defaults without harming responsible borrowers and lenders. 

http://www.realtor.org/topics/qrm/qrm_whitepaper

The Cost of Waiting For Home Prices to Fall

The Cost of Waiting

For Home Prices to Fall

 The are numerous people out there who want to buy a home, but are waiting for home prices to hit bottom. They want a guarantee that they are purchasing at the best possible price. In some markets, you may see a little more dropping of prices, especially in areas really hit by the foreclosure market (of which Massachusetts has one of the lower rates). But waiting may not be in your best financial interest. You should be concerned with the cost of buying a house, which is quite different from the price of a house.

The real cost of a house is made up of the price and the interest rate you will be paying.

The National Association of Realtors just reported that the average home price in the 4th quarter of 2010 rose .2%. In other words, price remained steady. A buyer who delayed a purchase might find solace in the fact that prices have not increased. However, the other news released the other day paints a different picture. Mortgage interest rates now average 5.05%, up from 4.17% from the middle of the last quarter.

By sitting on the sidelines for the last 90 days a purchaser lost:

    - $89.44 a month

    - $1,073.28 a year

    - $32,198.40 over the thirty year life of the mortgage

If you buy a $340,000 home, double all these numbers.

It also means that if you qualified for a $300,000 mortgage three months ago, today you would only qualify for a $272,000 mortgage.  The longer you wait, the less you will be able to afford if the interest rates keep rising. That means you either have to buy a home with less of the amenities you want or maybe located in a less desirable neighborhood, or you have to come up with a larger down payment.

Bottom Line

Even if prices fall another 10% this year, the cost of a home will increase if interest rates go up more than 1%. If you are in the market for a home, you should not worry about where prices are going. You should be more concerned about where the interest rates are going, and what the cost of buying a home will be later this year or in 2012.

Jim Armstrong

The chart and some of the details are from kmcblog.com. For more details, please go to:

http://kcmblog.com/2011/02/11/the-cost-of-waiting-for-prices-to-fall/

Mortgage Rates Back on the Rise

Mortgage Rates Back on the Rise

Rates for 30-year fixed mortgages rose to 4.39 percent this week from 4.17 percent a week ago, and average interest on 15-year loans moved to 3.76 percent from 3.57 percent, said Freddie Mac.

Interest for five-year adjustable-rate mortgages jumped to 3.4 percent from 3.25 percent, meanwhile, and one-year ARMs held at 3.26 percent. Rates have climbed along with long-term Treasury yields as traders unloaded Treasurys purchased before the Federal Reserve announced a $600 billion bond purchase program.

Source: Chicago Sun-Times (11/19/10)

Fewer Home Owners Are Under Water

Fewer Home Owners Are Under Water

 
In the second quarter of 2010, 21.5 percent of borrowers owed more than their homes were worth. That’s down 7.7 percent from the first quarter of the year when 23.3 percent of home owner with mortgages were under water.

Much of the improvement came from homes falling into foreclosure, wiping away negative equity. Rising home values also improved the situation in 45 of the metropolitan statistical areas, including the northeast region of the United States.

Mortgage Rates for Massachusetts at All-Time Lows...Again!

Mortgage Rates are at all-time lows right now; 30 year fixed, 20 year fixed, 15 year fixed and even Jumbo Rates, and they're showing no signs of rising! I don’t see them going any lower, but staying down at these levels for a while.

What’s moving Mortgage Rates? No one really knows right now but this is usually what happens, bonds go up, stocks go down.  Stocks go up, bonds go down. It’s really pretty easy to understand. However this mortgage market that we are in  is no where near normal.  In fact, it’s the total opposite, it’s like nothing we’ve ever experienced.

Refinance loans account for the majority of all present loan production, but home buyers are getting these incredible rates, too! What I don't understand is why there are not more home buyers placing offers, and why some properties just languish on the market when they are priced competitively. I have to think that the home buying consumer just does not have enough confidence in the overall economic outlook yet. I'm just afraid these same people may miss out on a rare real estate buying opportunity...low home prices and rock bottom mortgage interest rates.

30 year fixed mortgage rates remain in the 4.375% to 4.625% range.  The 30 year fixed rate mortgage is 4.375% for a qualified borrower.

Boston in the Top Ten Cities for Borrowers

Top 10 Best Cities for Borrowers
Some cities are better than others for borrowers.

The best cities have the lowest percentage of foreclosures and delinquencies, including a low percentage of bank-owned homes. In most of the cities on this best list, home prices are actually rising. Boston ranks 6th in the list of the top ten.

This kind of solid housing market motivates banks to offer lower rates and better terms.

Here are the 10 cities that Forbes ranks as the best for borrowers:
1. Kansas City, Mo.
2. Houston
3. Dallas
4. Virginia Beach, Va.
5. San Antonio, Texas
6. Boston
7. Pittsburgh
8. Denver
9. Seattle
10. Portland, Ore.

FHA Mortgage Insurance Premium to be Raised

The FHA will soon raise the UFMIP (Up Front Mortgage Insurance Premium) that they charge on all mortgages.

On any new FHA mortgages after April 5^th, the UFMIP will now be 2.25% of the loan amount, as opposed to the current 1.75%.

Currently a $300,000 purchase with standard 3.5% down payment would have a $289,500 Base loan amount. The mortgage insurance would be $5,066 (1.75% UFMIP). So that makes the Total loan amount $294,566. At 5.00% that would be $1,581 for Principal and Interest.

Same purchase price after April 5^th.

$300,000 purchase with 3.5% down payment would have the same base loan amount of $289,500. The mortgage insurance would go up to $6,513 (2.25% UFMIP). The Total Loan Amount is $296,013. At 5.00% that would be $1,589 for Principal and Interest.

As you can see this change will affect the overall balance of the mortgage, however it should not have a large impact on the monthly payment.

Here is how the change will work time-wise if a homebuyer wants to avoid the increase:

Homebuyers will need to have an FHA CASE number prior to 4/5/10. They will not have to close before that date. So for example, your client puts a property under agreement 3/25/10. They contact their mortgage person to immediately to start the application process and obtain an FHA case number. The buyer will be grandfathered in under the old calculation as long as they obtained their FHA case number prior to 4/5/10. The FHA Case Number is tied to the property as well as the client – so clients who have not identified or put a property under agreement by 4/5 will be subject to the new calculation.

Mortgage Rates Hit a Record Low

30-Year Rates Hit Record Low

The average interest rate for 30-year mortgages has fallen to the lowest level since Freddie Mac began compiling its weekly survey in 1971, declining to 4.71 percent this week from 4.78 percent a week ago.

Rates also were more attractive for 15-year fixed loans, which fell from 4.29 percent to 4.27 percent, but many consumers may not have qualified for them because they now face higher credit standards from lenders.

Still, the Mortgage Bankers Association's index of application demand, which rose 2.1 percent on a seasonally adjusted basis during Thanksgiving week from the previous week, shows that consumers were looking to take advantage of mortgage rates at a historic low.

Source: USA Today, Stephanie Armour (12/04/09)

RECORD LOW MORTGAGE INTEREST RATES
MOTIVATE BUYERS

Interest Rates For Last 6 Weeks

December 18, 2008 - The current mortgage interest rates have just fell to under 5.0%! Mortgage rates have never been lower, with the good news that the trend will probably hold or fall a little more in the next couple of weeks, but who knows how long that will continue. The fact is that we have historically extremely low interest rates. You would be crazy not to take advantage of this situation, with home prices that are at 2002 prices in many cases, and still a great supply of homes to choose from like you haven't seen in 2 decades.

Well this combination has been spurring Home Buyers to start making offers left & right. The number of homes going under agreement has been steady in eastern Massachusetts. We have been getting our Buyers some really great deals on real estate. We even have out-of-state clients who are buying up multiple properties as investments - sight unseen! (except for photos from MLS)

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