Michaels Mortgage Blog

New Rule From Fannie Mae Makes it Easier for Move-Up-Buyers to Purchase a Home!

September 9th, 2015

Fannie Mae just made it easier for move-up-buyers to purchase a new home. Until recently, conventional financing required a move-up-buyer to have 30% equity in their departing residence if they wanted to use future rents to offset the mortgage, otherwise they had to qualify for 2 mortgages. As most people cannot afford to qualify for two mortgages, this rule prevented a lot of move-up-buyers from being able to purchase a new home. Fannie Mae just eliminated the 30% equity rule, so now a move-up-buyer with limited to no equity, can now use a lease agreement and future rents to offset the mortgage on their departing residence, so they can qualify for a new conventional mortgage. Check out how to qualify under this new rule!

New Rule From Fannie Mae opens up Purchase Market for Buyers

During the housing downturn, Fannie Mae introduced a rule to prevent people from buying and bailing on the home they owned.

To qualify for a new conventional mortgage, they required a move-up-buyer to have 30% equity in the home they were departing so they could use future rents to offset the mortgage, otherwise they had to qualify for both mortgages in their debt to income ratios. They put this rule in place to prevent people from just walking away from their departing residence.

This rule prevented many buyers from being able to move up, as the negative or limited equity position in their existing home prevented them from being able to use future rents to offset the mortgage. This meant buyers had to qualify for two mortgages in their debt to income ratios, and we all know that most people cannot afford to do that.

Fannie Mae has changed this rule and made it easier for homebuyers to purchase a new home and keep their existing residence. They no longer require a homebuyer to have 30% equity in their departing residence, if they want to retain the home and convert it to a rental and use future rents to offset the mortgage.

New Rule. Fannie Mae now just requires a Current Executed Lease Agreement for the property that will be converted to a rental.

The underwriter will review and use the rental income reflected on the lease agreement provided, and they will verify that the rental income reflected on the lease is deemed acceptable and in line with market rents.

This means a move-up-buyer with negative equity, or limited to no equity, can now use a lease agreement on their existing home and use future rents to offset the mortgage, so they can now qualify for a new mortgage.

This new rule will help more move-up-buyers get back into the market, as there are still plenty of homes with limited to no equity, but buyers were stuck in these homes due to this 30% equity rule.

I am sure you know several people who wanted to move up but were unable to, due to the limited or no equity position they had in their departing residence. A good idea would be to go through your database of clients and friends and see who may qualify under this new rule

Owning a Rental Property is a Great Investment

Owning a rental property is a great investment. With annual rents continuing to rise as much as 3% – 4% in many parts of California, coupled with low vacancy rates in most areas, many move-up-buyers want to convert their departing residence to a rental property.

As you can see below, just a 4% increase in annual rent, can increase a $1,500 monthly rent up to $1,974 in just 8 years, an increase of $474, which is a 32% increase in your investment.

This new ruling by Fannie Mae is also going to allow a lot of people to convert their existing property to a rental property, so they can take advantage of the investment opportunity.

It is good news that logic is finally prevailing and that Fannie Mae is starting to ease up in their mortgage qualifying rules, as this 30% rule was preventing a lot of move-up-buyers from being able to purchase a new home.

The Impact of Rates on Buyer Purchasing Power

With this recent rule change by Fannie Mae, it’s a good time for buyers and move-up buyers to get into the market.

Changing mortgage rates do more to influence home affordability than changing home prices. This chart below shows the “impact of rates on buyer purchasing power or affordability“.

When rates increase by just .5%, a buyer loses 5% in purchasing power or affordability. Or vice versa, when rates decrease by .5%, a buyer gains 5% in purchasing power.

For example, see how the payment at the 3.75% rate on a $400k loan, is roughly the same payment as the 4.25% loan at $380k, a gain of 5% in purchasing power for a buyer. A 5% increase in purchasing power can make the difference for a buyer being able to afford a certain price range in their housing market.

If you have any questions about this new conventional rule or getting approved for financing, please feel free to contact me directly at 858-442-2686.

Tags: easier for move up buyers to purchase a home, negative equity homeonwers can now purchase a move up home, New rule for move up buyers
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Rising Rents Driving First Time Homebuyers into the Market!

August 29th, 2015

There has been an increase recently in first time homebuyers getting into the market to purchase a home. With annual rents continuing to increase on average 3% – 4% in most parts of California, homeownership is starting to look like a more viable option for many renters. There are terrific mortgage programs available for first time buyers to help them finance a home, some only require 3% down.

Rising Rents are driving first time buyers into the market

Annual rents have been increasing on average 3% – 4% in most areas of California. As you can see below, just a 4% increase in annual rent can drive a $1,500 monthly rent up to $1,974 in just 8 years, an increase of $474, which is a 32% increase in overall rent.

Compare this to buying a home and obtaining a low fixed rate and monthly payment that will not change. This is why it is important that buyers understand that home ownership is also a hedge against inflation and rising rents.

When you factor in the additional benefits of tax deductions and appreciation that come with home ownership, these are just some of the reasons why there has been a influx of new first time buyers looking to purchase a home in 2015.

The Impact of Rates on Buyer Purchasing Power

Changing mortgage rates do more to influence home affordability than changing home prices. This chart below shows the “impact of rates on buyer purchasing power or affordability“. As you can see below, when rates increase by just .5%, a buyer loses 5% in purchasing power or affordability. Or vice versa, when rates decrease by .5%, a buyer gains 5% in purchasing power.

For example, see how the payment at the 3.75% rate on a $400k loan, is roughly the same payment as the 4.25% loan at $380k, a gain of 5% in purchasing power for a buyer.

As rates have been trending higher in 2015, and coupled with rising home prices in most areas, the overall cost to purchase a home has been increasing.

Market experts are expecting rates to increase over 4.5% in the next 12 months, and home prices to increase another 5%-6% in the next 12 months, so the payment for a home purchase will probably be higher in 12 months than it is today.

The Conventional 3% Down With No Monthly Mortgage Insurance “PMI”

The conventional 3% down mortgage is the best mortgage option available for first time buyers in today’s market. This program is helping many first time buyers obtain home ownership, who may have not been able to otherwise. It is also allowing buyers to purchase a home with a low down payment and a low fixed rate.

It also allows ALL of the down payment to be gifted, so this means buyers can reach out for a gift instead of having to wait and save up the full 3% down payment.

There is also an option to eliminate the monthly mortgage insurance “PMI” from the mortgage payment, so this is helping buyers obtain an even lower monthly payment.

Let’s compare the conventional 3% down mortgage with No PMI to other low down payment options to purchase a home.

Compare the Savings on a $400k Home Purchase, with and without monthly mortgage insurance

On this $400k home purchase example, we will compare the savings on a conventional 3% down loan, with and without monthly mortgage insurance, and a FHA 3.5% down loan with monthly mortgage insurance.

To calculate property taxes, we will also use 1.2% of the purchase price, so $400 a month, and $75 a month for a homeowner’s insurance policy, so we can calculate what the total monthly PITI (principal and interest, taxes and insurance) payment is for each scenario.

Option #1. The figures on the first column, is a conventional 3% down loan with No PMI. The rate on a conventional 30 year fixed with No PMI is 4.375%. The total monthly PITI payment is $2,412.

Option #2. The figures on the second column, is a conventional 3% down loan with PMI. The rate on a conventional 30 year fixed with monthly mortgage insurance is lower at 3.99%, but there is also monthly mortgage insurance of $354. The total monthly PITI payment is $2,680.

Option #3. The figures on the third column, is a FHA 3.5% down loan with monthly mortgage insurance. The rate on a FHA 30 year fixed is 4%, but there is also monthly FHA mortgage insurance of $278. There is also a FHA funding fee of 1.75% due on all FHA loans, this fee of $6,755 was added to the loan amount in this example. The total FHA monthly PITI payment is $2,628.

As you can below, option #1 with the conventional loan and No PMI will help you obtain the lowest monthly payment and save you the most money. It will save you $269 a month over the conventional loan with PMI, and saves $216 over the FHA loan.

Over the next 15 years the conventional loan with no PMI will save $15,889 over the conventional loan with PMI, and $39,022 over the FHA loan.

In Summary. Instead of taking the conventional or FHA loan option and paying the mortgage insurance each month, the conventional loan with No PMI will give the buyer the lowest monthly payment.

Remember too, if you put down less than 10% with FHA, you have to pay the monthly mortgage insurance for the life of the loan, click HERE for a summary of the current FHA mortgage insurance rules.

3% Down Conventional Frequently Asked Questions and Answers

Here are the most frequently asked questions that buyers and real estate agents have in regards to the conventional 3% down mortgage.

1. What is the maximum loan amount with 3% down?

The maximum loan with 3% down is $417k, which is the conventional loan limit.

2. Can I receive the 3% down payment as a gift?

Yes, all of the 3% down payment can be gifted on this program. Closing costs and reserves can also be gifted if needed.

3. What credit score is required to qualify for this program?

A 620 credit score is required to qualify for this loan program. Please note, the lower the credit scores the higher the interest rate will be.

4. How do I eliminate the monthly mortgage insurance “PMI” from the payment on this program?

It’s very simple. All you have to do is take a slightly higher interest rate than normal, say from 4% to 4.375%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.

5. Can I buy a home with 3% down on 2nd homes or investment properties?

No, the 3% down is for Primary Residences only.

6. Is this program for first time buyers only?

Yes, but as long as you have not had any ownership in a property in the past 3 years, you can also qualify for this program. Or if there are 2 buyers, only one of the buyers must be a first time buyer.

7. Are there income limits for this program?

No, any buyer can qualify for this program regardless of income.

8. Do condos qualify for this program?

Yes, you can also purchase a condo using this program with only 3% down.

9. But FHA mortgage rates are lower than this program?

Yes FHA interest rates are lower, but when you factor in the very expensive FHA monthly mortgage insurance, the FHA overall monthly payment will always be higher than the conventional loan option with No monthly PMI.

10. What if I put down 5% or 10%, will I get a lower rate?

Yes, if you put down 5%, 10% or even 15% for the down payment, you will get a lower interest rate. Essentially the larger the down payment, the lower the interest rate you will get with conventional financing.

4 other reasons the Conventional 3% down program will benefit buyers vs FHA

There are some other great benefits to using this conventional program vs FHA financing, so you have have more available homes to choose from.

1. This conventional program is a great option for buyers who want to purchase a home in complexes that are NON FHA approved, so now you have more inventory to choose from and agents have more homes to show them!

2. This conventional program will help buyers afford to purchase a single family home instead of a condo, as it frees up having to pay monthly mortgage insurance and HOA dues, which can amount to roughly $600-$700 a month on a typical condo. This will open up a lot more inventory for buyers to purchase.

3. Conventional does NOT have an anti-home flipping policy, which means conventional buyers are allowed to purchase homes that are being fixed up and flipped by investors with less restrictions. So now buyers don’t have to worry about the FHA’s strict anti-home flipping policies either (which may require 2 appraisals etc)! In fact, the FHA just announced they are not extending their Anti-flip waiver, which means FHA buyers have to wait 90 days before they can buy a flipped home.

4. Compared to conventional financing, FHA appraisals can be a little more strict in terms of asking sellers for repairs on a property, so this is another benefit of using this conventional program.

It is important to get creative to find a home and get into contract these days, and this new conventional program is one way to help you do that!

If you have any questions about this new conventional program or getting approved for financing, please feel free to contact me directly at 858-442-2686.

Tags: first time buyers, millenial buyers, Rising Rents Driving First Time Homebuyers into the Market! rising rents
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Why 1 in 4 Homebuyers are using FHA Financing to Purchase a Home!

July 25th, 2015

FHA financing is a very popular program with homebuyers and homeowners. According to RealtyTrac, 1 in 4 homebuyers are using FHA again to purchase a home, the highest share since the first quarter of 2013. As the amount of investors flooding the market has started to dissipate, first-time homebuyers and boomerang buyers have started to step into the gap and pick up the slack, and many of them are using FHA to finance their homes. Here are some FHA buyer tips and recent updates from the FHA, so you are fully informed how to take advantage of FHA financing to purchase a home or refinance.

Why 1 in 4 Homebuyers are using FHA Financing to Purchase a Home!

Lot’s of first time buyers are taking advantage of FHA financing. With it’s low down payment requirements, easier qualification rules for buyers with less than perfect credit, and flexible loan programs to allow co-signers etc, FHA financing plays a significant role in the housing market by helping many first time homebuyers finance a home that would not be able to otherwise.

As the housing downturn started back in 2008, there are many buyers who suffered a financial hardship who are now back in the market to purchase a home. The FHA only requires a 3 year waiting period after a foreclosure or short sale (see below for more details), so FHA financing has become a very popular financing option for “Boomerang” buyers too.

“Effective” FHA Mortgage Rates Near Cheapest in History

With FHA 30-year mortgage rates still near all time lows at 3.5% on a 30-year fixed, this means the “Effective” overall mortgage rate (interest rate + FHA mortgage insurance rate) leaves FHA loans near the cheapest they’ve ever been in history, see below.

On some loan scenarios, the monthly mortgage insurance on a FHA loan is now lower than the monthly mortgage insurance on many conventional loans, especially on the low down payment options, so the overall monthly payments with a FHA loan are lower than a conventional loan on scenarios.

Therefore it’s a good idea for buyers with less than perfect credit (lower than 680 credit scores) to compare the monthly payments on both conventional and FHA options.

FHA Loan Frequently Asked Questions

Here are some tips as well as some of the most frequently asked questions that buyers and agents have about FHA loans.

What is the FHA?

FHA stands for Federal Housing Administration. The FHA was formed in 1934 and was moved to the U.S. Department of Housing and Urban Development (HUD) in 1965. FHA is the world’s largest mortgage insurer. The FHA does not “make” the loan – it insures the loan for the lender.

What is FHA mortgage insurance?

FHA mortgage insurance premiums (MIP) are premiums you’ll pay at closing, and in the monthly mortgage payment, to insure your lender’s loan against default. The amount of FHA MIP paid is linked to the size of your down payment, and the length of your loan.

Homeowners making a down payment of 10% or more and financing via a 15-year mortgage pay the least amount of FHA MIP. Homeowners making the minimum down payment of 3.5% and using a 30-year loan, will pay more FHA MIP.

How Do I Cancel FHA Mortgage Insurance?

If you put down less than 10%, you will pay FHA MIP for the life of the loan, so the only way to cancel it would be to refinance into a conventional loan. If you put down more than 10%, FHA MIP will cancel after a certain amount of years. Click HERE for a separate FHA article I wrote on when and how FHA mortgage insurance will cancel.

What down payment is required for an FHA loan?

Most FHA loans only require a 3.5% down payment. The 3.5% is calculated against the your home’s purchase price. TIP: We can also give a FHA buyer a 3% lender credit to cover ALL their closing costs. Make sure to ask me how you can qualify for this lender credit to help pay all your closing costs.

What is the Maximum Loan I can Qualify For?

FHA offers financing based on county loan limits. For example, FHA buyers can get 3.5% down payment financing up to a loan of $612,950 in San Diego, $636,000 in Los Angeles and Orange County), and $424,150 in Riverside and San Bernardino. Click HERE for the maximum loan limits for your county.

*Please note that interest rates are better for loans under $424,150 which are known as conforming loans, and rates are higher for loans >$424,150 as they are considered FHA jumbo loans.

What is a FHA Streamline Refinance?

A FHA streamline Refinance is a terrific refinance program available to homeowners who already have a FHA loan. This program allows a homeowner with an existing FHA loan refinance into a new FHA loan with no appraisal or income requirements.

Because you already have a FHA loan, the FHA allows you to refinance your current loan balance into a lower rate with very limited documentation so you can take advantage of lower rates and save extra money . It is a fantastic program available only to FHA homeowners members.

Most homeowners will be able to save around $100 – $200 a month with the lower FHA monthly mortgage insurance payments and low interest rates. Ask me for more details how to qualify for this refinance program.

What is the FHA waiting period after a foreclosure, bankruptcy or short sale?

Short Sale: It is 3 years before a buyer can repurchase again using FHA financing. *TIP: The FHA has a loophole that not many people know about, if the FHA buyer did not have any late payments before their short sale, they are allowed to automatically qualify again for FHA financing.

Foreclosure: It is 3 years before a buyer can repurchase again using FHA financing.

Bankruptcy: For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before a buyer can repurchase again using FHA financing.

FHA Reduces Wait Times for Buyers Who Had Foreclosure or Short Sale

The FHA just announced last month, they have reduced the time buyers must wait after a bankruptcy, foreclosure or short sale before qualifying for an FHA-backed mortgage, if the buyer experienced an “economic event” whereby their household income fell by 20% or more for a period of at least six months.

The period had previously been two years following a bankruptcy, and three years following a foreclosure or short sale. The agency has now reduced the waiting period to ONE YEAR.

For additional information on how to qualify under this new rule, I wrote an article recently on this subject for the San Diego Union Tribune newspaper, click HERE

What Credit Score is Required for FHA?

Most lenders only require a credit score of 580 to qualify for a FHA loan.

Can I use a cash down payment gift for an FHA loan?

Yes, FHA mortgage guidelines allow for cash gifts of down payment. Down payment gifts may come from a relative, a fiance, an employer, an FHA-approved charitable organization, or a government housing grant program. Cash gifts may not come from friends or co-workers. All cash down payment gifts must be accompanied by an FHA Gift letter.

Are FHA Loans for first-time home buyers only?

No, FHA loans are not restricted to first-time home buyers. Anybody can use an FHA mortgage. Whether you’ve owned a home before does not affect your FHA mortgage eligibility.

FHA Buyers Can Purchase a 3-4 Unit Property

Did you know the FHA allows buyers to purchase a 3-4 unit home with FHA financing and they only have to put down 3.5% to qualify?

FHA buyers can finance up to $699k for a 2 unit purchase, $845k for a 3 unit purchase, and $1,050,00 for a 4 unit purchase.

Buyers can live in one unit and rent out the other 3, they can also use the rental income from the other 3 units to qualify for a loan. This is a great way for buyers to start out as a real estate investor.

Can I Buy an Investment Property With FHA?

No, you have to occupy the property, as you can only purchase a primary residence using FHA financing, no second or vacation homes either.

Tips for FHA Buyers Purchasing Condos!

FHA buyers have to be careful when looking to buy a condo, as the complex has to be FHA approved. Here are 4 tips to ensure you are buying a condo that will qualify for FHA financing.

1. Is the complex currently FHA approved? Check HERE
2. What are the owner occupied ratios? FHA requires 51% Owner Occupied.
3. Are there >15% of the units currently 60 days delinquent on their HOA dues? (FHA requires <15%)
4. Is there any current litigation in the complex? (None allowed).

TIP: Did you know PUD’s do NOT have to be FHA approved for buyers to obtain financing? I have seen this a lot recently whereby a complex is Not showing up FHA approved and the agent and FHA buyer give up looking in the complex because they assume all the properties are “Condos”. But upon further research it’s discovered that many of these properties are actually detached condos built within a condo project and are classified as PUDs and NOT condos, and therefore do not need to be FHA approved for financing.

Tips for Buying Flipped Homes With FHA Financing

As investors continue to scoop up properties and flip them to FHA buyers, it is important to know when you are allowed to go into contract on a home that was flipped.

FHA’s 90 Day Flip Waiver Discontinued! The FHA just announced at the beginning of 2015 they will not be extending their Flip waiver. This flip waiver allowed FHA buyers to purchase properties that are being resold within 90 days of being fixed and flipped.

So this means FHA buyers will have to wait >90 days to purchase a home that was fixed and flipped by a seller. Any contracts dated after Dec 31st 2014 will qualify under this new rule.

Click HERE for additional information that buyers and sellers should know when buying flipped properties with FHA financing.

Down Payment Tip: Create a Bridal Registry Account

Did you know the FHA allows couples to set up a “Bridal Registry Account” if they are planning on getting married soon and want to accumulate funds for their down payment to buy a home? This is a great way for “married to be” couples to come up with their down payment to buy a home. Here’s how it works—3 simple steps:

1. Couple opens a savings account prior to the wedding (label it “Bridal Registry”).
2. Gifts are deposited.
3. All of the 3.5% down payment can come from these gift funds.

No gift letters. No paper trails. Just a simple savings account labeled “Bridal Registry account” and buyers are on their way to having the wedding present of their dreams. Click Here for additional information how to qualify with this program.

Buyers Can Purchase a Home with a FHA 203(k) mortgage?

The FHA 203(k) mortgage is similar to a construction loan. With the 203k, you can buy a home and finance its major repairs into the purchase price. The 203k allows for almost anything — roof replacement, garage addition, new flooring and finishes, and more.

Use a Co-Signer to Qualify to Purchase a Home

If a buyer needs help qualifying to purchase a home, the FHA allows a co-signer to help them qualify. The co-signer does NOT have to live in the home either. Also, an unmarried couple can also purchase a home together using FHA financing too.

The FHA Good Neighbor Next Door Program

The FHA Good Neighbor Next Door program (GNND) is a special FHA program for teachers, law enforcement officers, firefighters and emergency medical technicians. The Good Neighbor Next Door program allows eligible buyers to purchase HUD homes at a 50% discount from the list price, and with a down payment of just $100. You must only occupy the home as your principal residence for three years. Let me know if you want further information on this.

I hope you found this list of FHA questions and answers useful. If you have any questions about FHA or getting approved for financing, please feel free to contact me directly at 858-442-2686.

Tags: FHA purchase tips. How to purchase a home with FHA financing. FHA refinance tips, FHA tips for homebuyers, Why 1 in 4 Homebuyers are Using FHA Financing to Purchase a Home
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FHA and Fannie Mae Introduce Stricter Underwriting Rules for Student Loan Repayments

June 23rd, 2015

The FHA has announced they will be changing how they calculate student loan payments come September 2015. Until now, the FHA allowed you to exclude student loans that were in deferment from your debt to income ratios.

Under new rules, the FHA will calculate 2% of the student loan balance regardless if the loan is in deferment, unless a payment is already established. So on a $25k student loan, the payment calculated will be $500.

This means if you are planning on applying for an FHA loan and have deferred student loans that would disqualify you if their payment was included in your debt ratio, you should get moving sooner rather than later, or adjust your plans to get qualified for a mortgage.

As more than 65% of home buyers are carrying student loans these days, and the average student debt per borrower is $25k, this new ruling will affect borrowers looking to qualify for a FHA loan.

These rules go into affect in September 2015.

Fannie Mae also announced recently they will be changing how they calculate student loan payments for conventional loans.

They are now using 1% of the student loan balance, regardless if your student loan payment is lower than 1% of the balance.

So even if you are paying a monthly payment of $125 on a $30k student loan balance for example, a $300 monthly payment (=1% of the balance) will be calculated in the debt to income ratios.

These new rules are already in affect and we are seeing it affect some borrowers, as the higher student loan payments are lowering the final loan approval amounts borrowers can qualify for.

If you have been approved for a conventional mortgage recently and you are carrying student loan debts, but you are still shopping for a home and are not in contract, it would be a good idea to check if this new rule affects you.This will ensure you can still qualify for the mortgage.

If you are planning on applying for an FHA loan and have deferred student loans that would disqualify you if their payment was included in your debt ratio, you should get moving sooner rather than later on the loan approval process so you can see what you qualify for.

If you have any questions about any of this information above, or you would like to get approved for financing, please feel free to contact me directly at 858-442-2686. I look forward to chatting soon!

Tags: FHA and conventional new rules for student loans, FHA and Fannie Mae Introduce Tougher Underwriting Rules for Student Loan Repayments, student loans and conventional financing, student loans and FHA financing, tougher rules for FHA and fannie mae for student loans repayments
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Helping Boomerang Buyers Purchase a Home Again

June 3rd, 2015

2015 is already shaping up to be the year of the Boomerang buyer (repeat home buyer). As it is 7 years since the housing downturn started, lots of buyers who suffered a financial hardship in the recent past are getting back into the market to purchase a home again in 2015. There were several changes recently to the waiting periods when a borrower can obtain a new mortgage and repurchase a home again after a Foreclosure, short sale or bankruptcy, here is a summary of these waiting periods below.

Boomerang Buyers are back in the market.

As the housing downturn started back in 2008, there are many buyers who suffered a financial hardship who are now back in the market to purchase a home. Here are some results from a recent survey by Afterforeclosure.com.

The survey reports that 79% of those who lost their home are interested in buying again, 41% of buyers have higher incomes than before the housing crash, 63% report their debts are lower than before the crash, and 46% want to purchase in a lower price range.

The survey also reports that buyers are unaware of programs available to them to help them purchase after just a year or two, therefore knowing the time lines when buyers can repurchase again after foreclosure or short sale is very important.

2015 Waiting Periods When a Buyer can Repurchase After a Short Sale, Foreclosure or BK

Buyers today essentially have 3 options when it comes to obtaining financing to purchase a home. In fact, more than 9 out of 10 mortgages are either funded by Fannie Mae/Freddie Mac, the FHA or VA!

So if a buyer is looking to purchase and needs financing, it is more than likely they will be using one of these 3 financing options. Here are the current 2015 waiting periods when a buyer is looking to repurchase a home after either a short sale, foreclosure or bankruptcy.

1. When Can I Repurchase Again After a Foreclosure?

Here are the time lines for when a buyer can repurchase again after a Foreclosure and they are trying to obtain either Conventional, FHA or VA financing.

Conventional. It is 7 years before a buyer can repurchase again using conventional financing.

New Rule added. There was a new change implemented recently (see below), whereby if you included the foreclosure in a bankruptcy, you can qualify after 4 years instead of 7 years. Contact me for more details on how to qualify under this new rule.

“For conventional financing, the bankruptcy guidelines have been updated to indicate that if a mortgage debt has been discharged through bankruptcy, even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt, the borrower is held to the bankruptcy waiting periods and not the foreclosure waiting period. This means a buyer can now qualify for conventional financing after 4 years from the bankruptcy date, instead of the foreclosure date of 7 years”.

FHA. It is 3 years before a buyer can repurchase again using FHA financing. Or, see below for how a FHA buyer can qualify again after just 1 year if they experienced an economic event.

VA. It is only 2 years before a buyer can repurchase again using VA financing.

2. When Can I Repurchase Again After a Short sale?

Here are the time lines for when a buyer can repurchase again after a Short Sale and they are trying to obtain either Conventional, FHA or VA financing.

Conventional. It is 4 years before a buyer can repurchase again using Conventional financing. Please note, it is used to be 2 years if a buyer had 20% down, but this was updated recently to 4 years no matter how much the down payment is.

FHA. It is 3 years before a buyer can repurchase again using FHA financing.

*FHA TIP: The FHA has a loophole that not many people know about, if the FHA buyer did not have any late payments before their short sale, they are allowed to automatically qualify again for FHA financing.

New FHA Short Sale Rule. The FHA announced in late 2013 they have reduced the time line that buyers must wait after a bankruptcy, foreclosure or short sale before qualifying for an FHA-backed mortgage, if a buyer experienced an “economic event” whereby their household income fell by 20% or more for a period of at least six months.

The period had previously been two years following a bankruptcy, and three years following a foreclosure or short sale. The agency has now reduced the waiting period to ONE YEAR.

For additional information on how to qualify under this new rule, I wrote an article recently on this subject for the San Diego Union Tribune newspaper, see HERE

VA. It is only 2 years before a buyer can repurchase again using VA financing.

3. When Can I Repurchase Again After Bankruptcy?

Here are the time lines for when a buyer can purchase again after a Bankruptcy and they are trying to obtain either Conventional, FHA or VA financing.

Conventional. For a chapter 7 Bankruptcy it is 4 years and 2 years for a chapter 13 bankruptcy, before a buyer can repurchase again using Conventional financing.

FHA. For a chapter 7 Bankruptcy it is 2 years and 1 year for a chapter 13, before a buyer can repurchase again using FHA financing. Or, see above for how a buyer can qualify again after just 1 year if they experienced an economic event.

VA. For a chapter 7 Bankruptcy it is 2 years, and 1 year for a chapter 13 bankruptcy, before a buyer can repurchase again using VA financing.

4. What if I don’t fit the rules above?

There are new mortgage options available for buyers who do not fit these more traditional mortgage options above.

Portfolio lenders are stepping in to provide mortgage options for buyers who cannot qualify for conventional, FHA and VA financing, and with terms much better than private financing.

We have lenders who will provide financing for buyers less than 6 moths out of a foreclosure, short sale or BK for example. A larger down payment will be required of course, and rates will be higher than traditional loans. Contact me for more details on how to qualify for these new mortgage programs.

Helping Buyers Rebuild Their Credit

It is also very important that buyers have started to re-establish their credit again since their hardship. For example, even though the required waiting period of say 2 or 3 years may have passed, it is also important that buyers have the required credit scores to qualify again for financing. For example, the FHA and VA only require a 580 credit score to repurchase a home again.

The first step is for a buyer to get a copy of their credit report to verify if their financial hardship or discharge is reporting correctly and to also see what their scores are.

Then the next step is for buyers to start rebuilding credit scores. You can check out my “Credit Education and Improvement” section on my website (see HERE ), which is devoted to helping buyers and consumers understand how credit works and how to improve their scores, so they are able to score the best rates and financing terms.

Tips for Buyers Looking to Purchase Again

There are many buyers who suffered a financial hardship in the recent past who are already back in the market again to purchase a home. As the VA only requires 2 years from a short sale or a foreclosure, and the FHA only 1 year in some cases, there are a lot more buyers who are eligible to repurchase again but probably just don’t know they can.

A lot of buyers I talk to who suffered a financial hardship in the past, are genuinely surprised when they realize that the FHA or VA for example allows them to purchase again after just 2-3 years!

Tip for real estate agents, a good idea is to check the dates with any clients, friends or family you helped short sale in the past, or anyone who had a foreclosure, and verify how much time has elapsed since their hardship, so now you can let them know when they can repurchase again using these waiting periods above.

Make sure your buyers know too how important it is that they rebuild their credit, and that they should contact you if they need credit tips on how to rebuild their credit.

I also wrote a piece for the San Diego Union Tribune discussing these topics above, which explain the “Guidelines for repurchasing a home after a Financial Hardship'” you can check it out HERE

If you have any questions about any of these repurchase time lines above, or you would like to get approved for financing, please do not hesitate to contact me directly at 858-442-2686.

Tags: buying a home after a bankruptcy, buying a home after short sale or foreclosure, Helping Boomerang Buyers Purchase a Home Again
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FHA Buyers Beware! FHA Cancels 90 Day Flip Waiver.

April 25th, 2015

FHA buyers have to be careful when shopping for homes, as the FHA has cancelled their 90 Day Flip Waiver. This waiver allowed FHA buyers to purchase properties that are being resold within 90 days of being fixed and flipped. This means that all FHA buyers now have to wait >90 days to purchase a home that was fixed and flipped by a seller. Buying and selling flipped properties can be a little challenging in today’s market depending on the financing the buyer is trying to get. Here are the different rules in place for buying a flipped property when using either FHA, conventional and VA financing.

FHA Guidelines for Financing Flipped Properties

The FHA have Discontinued their 90 Day Flip Waiver. This waiver allowed FHA buyers to purchase properties that are being resold within 90 days of being fixed and flipped.

Therefore buyers who plan on using FHA financing, will need to make sure their purchase contract and loan application are dated 90 days AFTER the home was acquired by the seller, otherwise it will not qualify for financing.

Another potential issue to look out for, is if there is greater than 100% profit to the seller within 180 days. There are lenders who may ask for a 2nd appraisal to substantiate the value of the home.

In addition, the seller will also probably have to provide proof of all the repairs done to increase the value of the property by 100%.

With 1 in 5 buyers using FHA financing to purchase a home today, it is important to know the different rules in place to qualify with FHA. With its minimum down payment requirement of only 3.5%, easier qualifying rules, and flexible loan programs which also allow co-signers, FHA is helping many buyers finance a home who may have not been able to otherwise. See HERE for additional FHA rules to be aware of.

Conventional Rules for Financing Flipped Properties

What many people do not know, is that conventional financing does not have an anti-Flip policy, so there is actually no limit on the amount of profit a seller can make in any given amount of time when reselling a home.

But, what buyers and Sellers needs to look out for, is lenders who will apply their own set of “overlays”, which are rules a lender will apply on top of regular conventional underwriting rules to minimize their risk on the transaction. For example, there are some lenders who will ask for two appraisals, if the profit to the seller is more than 20% in less than 90 days.

Another issue that comes into play, is when a buyer needs to get financing over 80%, because now the buyer has to qualify for mortgage insurance “PMI”. When “PMI” companies have to get get involved in the transaction, they may want to see more documentation to justify the appreciation on the property, so be prepared to document the value increase thoroughly with supporting documentation, or once again, some lenders may ask for a second appraisal.

Therefore, the secret to funding a flipped property using conventional financing, is to make sure the lender has No Flip Overlays.

VA Guidelines for Financing Flipped Properties

There is also a misconception out there that the VA has their own set of rules for flipped properties, when in fact the VA does NOT have an anti flip rule.

The VA has no limit on the amount of profit a seller can make in any given amount of time when reselling a home, but once again the catch once is, there are lenders who will apply their own set of “overlays” on a flipped transaction to minimize their risk on a transaction..

So it is important ask a lender upfront what their flipped rules are, so you choose a lender who will follow the VA’s flip rules and not make up their own.

We have several VA lenders that we are approved with, who do NOT have any additional VA rules for financing flipped properties.

Address All Concerns Upfront on a Property

A good idea is to address all concerns upfront on all flipped properties. A good rule of thumb for agents and buyers, is to check the purchase date when the seller bought the property, as this will determine many of the rules above.

If the property is being resold within 90 days, a FHA buyer needs to wait 90 days to purchase that property.

Another good rule of thumb for buyers and agents, is to confirm with the lender if they follow regular conventional and VA rules for financing flipped properties, or what additional “overlays” will they apply on a property if it is being resold within 90 days for example.

Doing this homework upfront will ensure the buyer will qualify for financing and there will be no issues getting the transaction closed for all parties involved.

If you have any questions about rates or financing on a flipped property scenario, please do not hesitate to contact me directly at 858-200-9602 to chat.

Tags: FHA Buyers Beware! FHA Cancels 90 Day Flip Waiver! FHA cancels flip waiver
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Conventional vs FHA: Compare a $400k Purchase using 3% Down Conventional Financing vs 3.5% Down FHA

April 13th, 2015

The new 3% down conventional mortgage is a great purchase option for buyers compared to FHA, as buyers have the option to remove the monthly mortgage insurance “PMI” from their mortgage payment. The 3% down mortgage program also allows ALL of the down payment to be gifted just like FHA, so now buyers can reach out for a gift instead of having to wait and save up the full 3% down payment. So which is the better option for buyers? Check out this example below comparing a $400k conventional 3% down purchase to FHA.

Compare a $400k purchase with conventional 3% down and No PMI vs FHA

There is an option for buyers to remove the monthly mortgage insurance “PMI” from their payment on the 3% down conventional morrtgage. This will help buyers obtain the lowest monthly payment on their home loan.

Here is an example of a $400k purchase, comparing a conventional 3% down loan with No monthly mortgage insurance “PMI”, versus a FHA 3.5% down loan.

On the left side is the conventional 3% down No PMI loan option. You only have to put down 3% which amounts to $12k. You can get a 30 year fixed rate of 3.99%. The total monthly PITI payment is $2,243.

On the right hand side is the FHA 3.5% down payment option, which amounts to $14k. You can get a lower interest rate of 3.5%, but you also have to pay monthly FHA mortgage insurance of $409 a month. On a FHA loan, you also have to pay an upfront FHA funding fee of 1.75%, which amounts to $6,755. The FHA total monthly PITI payment (including FHA mortgage insurance) is $2,566.

The conventional 3% down loan option with NO PMI saves you $323 a month over the FHA loan.

Over the next 15 years, you will save $56,485 with the conventional loan over the FHA loan (see below).

Remember too, when you put down less than 10% with FHA, you will have to pay FHA mortgage insurance for the life of the loan, see HERE

In Summary. Instead of taking the FHA loan option and paying the expensive FHA mortgage insurance each month, the conventional loan with No PMI will give you the lowest monthly payment.

Or you also can turn around and put the additional $323 monthly savings into purchasing an extra $50k in home and still have the same monthly payment as the FHA loan.

3% Down Conventional Frequently Asked Questions

Here are the most frequently asked questions that buyers and real estate agents have in regards to the new conventional 3% down loan option.

1. What is the maximum loan amount with 3% down?

The maximum loan with 3% down is $417k, which is the conventional loan limit.

2. Can I receive the 3% down payment as a gift?

Yes, all of the 3% down payment can be gifted on this program. Closing costs and reserves can also be gifted if needed.

3. What credit score is required to qualify for this program?

Only a 620 credit score is required to qualify for this loan program. Please note, the lower the credit scores the higher the interest rate will be.

4. How do I eliminate the monthly mortgage insurance “PMI” from the payment on this program?

It’s very simple. All you have to do is take a slightly higher interest rate than normal, say from 4% to 4.25%, and we use a lender credit with the higher interest rate to eliminate the PMI from the mortgage payment. This is also known as lender paid mortgage insurance.

5. Can I buy a home with 3% down on 2nd homes or investment properties?

No, the 3% down is for Primary Residences only.

6. Is this program for first time buyers only?

7. Are there income limits for this program?

No, any buyer can qualify for this program regardless of income.

8. Do condos qualify for this program?

Yes, you can also purchase a condo using this program with only 3% down.

9. But FHA mortgage rates are lower than this program?

10. What if I put down 5% or 10%, will I get a lower rate?

4 other reasons to use Conventional vs FHA

There are some other great benefits to using this conventional program vs FHA financing, so you have have more available homes to choose from.

It is important to get creative to find a home and get into contract these days, and this new conventional program is one way to help you do that!

If you have any questions about this new conventional program or getting approved for financing, please feel free to contact me directly at 858-442-2686.

Tags: compare a $400k purchase with 3% down conventional vs FHA with 3.5% down, compare FHA vs conventional, Conventional vs FHA: Compare a $400k Purchase with 3% Down Conventional Financing
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6 Tips to Get a VA Purchase Offer Accepted by the Seller

April 11th, 2015

Often I hear from buyers and agents that it is tougher to get a VA purchase offer accepted. It is true that some sellers will look the other way when they see a VA purchase offer, due to the zero down payment “no skin in the game”, and the assumption they will also need to cover the VA closing costs. Here are some tips you can use to debunk seller held myths about VA financing, so you can get your VA purchase offer accepted.

The misconception sellers have about VA closing costs

There is a misconception out there that the seller must pay for some or all of a VA buyer’s closing costs. The seller is NOT required to pay ANY costs for the buyer, but is allowed to pay up to 4% for VA loans.

But there are certain “VA non-allowable” costs for which a VA buyer is forbidden to pay, (for example No escrow fees, wiring, notary, tax service or processing fees are allowed to be charged).

Here is a good tip to help get a VA offer accepted, so this issue of who covers these VA non allowable fees does not become an issue. It is advised that the following language be inserted in to the purchase contract, so the seller is not put off by the VA offer: “Seller not responsible for any buyer closing costs, regardless of the selected loan program. All agency-related “non-allowable” costs to be borne/paid by lender”.

This means the VA Non-Allowable fees will be paid by a lender credit instead of the seller, we do this for all our VA buyers. So now the seller will NOT dismiss the VA offer right away, does NOT have to cover any closing costs, negotiations are easier, and the buyer and seller can strike a deal.

6 Tips to get your VA offer get accepted

Here are some other tips that you can use to help your VA offer get accepted.

1. Include a personal cover letter with your purchase offer

A good idea in this competitive housing market is to include a personal cover letter with the offer that introduces your family and explains why you are the right candidate to purchase the home. Include a family picture too.

If you can tug at the heart strings of the seller, they may be more inclined to choose your offer over others. There are sellers who would love to help a military or veteran family obtain home ownership.

2. Include a VA DU underwriting approval with your offer

Include a VA DU underwriting approval with your offer. A DU (desktop) underwriting approval is when a buyer’s loan application and credit report has been ran through the VA’s automated underwriting systems and was approved.

A DU underwriting approval displays the most important information on a buyer’s profile, which gives the seller a better idea of the strength of the buyer. For example, a DU approval displays a buyer’s credit scores, debt to income ratios, assets, reserves, any applicable down payment and the type of loan program they are approved for.

3. Provide proof of reserves/assets/down payment funds to strengthen offer

The zero down payment requirement with VA means less skin in the game. We can’t argue with this because VA allows 100% financing, so this does amount to very “little skin in the game” from a buyer.

Therefore it’s a good idea to include proof of reserves and assets and any applicable down payment funds along with your offer, so this shows the seller the buyer has applicable funds to close if any additional funds are needed to close the transaction.

4. Increase your deposit

Want to show a seller how serious your offer is? Consider putting down a bigger deposit in earnest money. This may seem risky for some, but earnest money is there for a reason. If you are uncertain about putting a “noticeable” amount of earnest money on the table, it may be a sign to the seller that you are uncertain about the house itself.

Assuming you hold up your end of the bargain and you have the right contingencies in place, it won’t cost you any more in the long run since the deposit goes towards your down payment if financing is involved.

*As a VA buyer typically qualifies for zero down financing, they will get their deposit back at closing.

5. Be flexible and don’t ask the seller for credits to cover closing costs

It’s a good idea to ask the seller’s agent upfront what you can do to make the offer more enticing to the sellers.

For example, can you be flexible on the closing date for the seller? Also, a purchase offer asking for seller credits to pay for your closing costs will usually place behind an offer that does NOT ask for any seller credits. Some people assume just because a buyer does not have funds for closing costs, to just ask the seller to cover them.

SOLUTION: To make a buyers offer more competitive, the lender can pay for ALL the buyers closing costs with a lender credit.

How does this work? It’s easy, instead of taking say a 3.375% 30 year fixed rate, just take a slightly higher rate of 3.75% instead, and now there is a lender credit of roughly 2.5% available that can be used to pay ALL a buyers closing costs.

Not only is this a good negotiating tactic so the buyer and seller can strike a deal, but of course it saves a buyer money too. We present this option to all our buyers.

Another Tip, is to offer to pay for the sellers Owners title policy and transfer tax, these fees amount to roughly $2,500 on a $400k home, so this is another way to sweeten the deal for the seller to accept your offer. If the buyer does not have the funds, we can also pay for these fees with a lender credit.

6. Close the Transaction Faster

Being able to close a transaction faster is another way to entice the seller to accept your offer in this competitive market. For example, if a seller is reviewing 3 offers, and there is a 21 day offer, a 30 day and 45 day offer, many times the seller will take the faster closing.

My company Citywide Financial Corp can close a Conventional, FHA or VA Purchase Transaction in 21-25 days. We have an outstanding team set up and dedicated to help close transactions fast.

Full transparency upfront is the key to getting an offer accepted these days, because usually the “Path of Least Resistance” is what we look for when reviewing offers! As many times the offer that is presented the clearest, is flexible and addresses any issues upfront, is the offer that will be picked!

If you have any questions about any of these tips above or getting approved for financing, please do not hesitate to contact me directly at 858-442-2686. I look forward to chatting soon.

Tags: 6 Tips to Get a VA Purchase Offer Accepted, 6 tips to get your VA offer approved by the seller, how to get a VA offer accepted, make your VA purchase offer stand out from the crowd
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5 Ways to Raise Your Credit Score – And Fast

March 29th, 2015

If you are looking to improve your credit score quickly, now is the time to get started. Give us a call and we will review your credit and find out exactly where you stand and where you need to get to. In the meantime, here are 5 tips you can utilize right away to give your score a little boost.

5 ways to increase your credit score-and fast

Here are 5 great strategies that you can utilize right away to give your score a little boost.

1. Get Your Report

The three main credit bureaus, Equifax, Experian®, and TransUnion®, are required by law to provide you with a free copy of your credit report once every 12 months. To request your free copy (one from each company) visit AnnualCreditReport.com or call 1-877-322-8228. (Note: free credit reports do not include credit scores.

Scores can either be purchased on-line or pulled by your mortgage professional.) While you’re on-line, be sure to visit www.optoutprescreen.com as well. This will help you “opt out” of all the junk mail you get in the mail, credit experts advise this will give your score a boost immediately.

2. Create Some Balance:

The trick is to get and keep your balances below 30% of your credit limit on each card. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Canceling those cards may inadvertently undo all of your hard work.

3. Know your limits:

Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances.

Also, if you’re in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.

4. Protect Your Interests:

Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it’s listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it’s important to monitor your credit every four to six months.

5. Even the Score:

If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau’s website and file a complaint on-line. If supporting documents are necessary, you have to file your dispute by mail.

If you know of anyone that needs a little help improving their credit scores so they can qualify for a loan or they need help getting pointed in the right direction to repair their credit, feel free to contact me at 858-442-2686 with any questions you have. I look forward to chatting soon.

Tags: 5 Ways to Raise Your Credit Score - And Fast
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Own vs Rent: How Much Home Can You Purchase For $3000 a Month?

March 28th, 2015

In many parts of CA it is now cheaper to own a home versus rent, especially when you factor in all the financial benefits and tax deductions you get to take advantage of when you own a home. I wanted to share a “Own vs Rent” financial analysis report I sent a client this week, that shows how much home they can purchase for $3,000 a month vs renting for the same monthly payment.

Craig Sewing’s American Dream TV Show

First of all, I wanted to share my recent appearance on the Craig Sewing TV show, the American Dream. We were talking about the future of interest rates and tips to help buyers qualify to purchase a home. Craig’s show airs on a Saturday morning at 10am on Channel 4 on Time Warner and Cox, and he always has great content for the real estate and mortgage markets. You can click in the link below to view it.

Compare Owning vs Renting for $3,000 a month

There are many families and individuals all over California are paying $3,000 a month in rent. What many don’t know, is how much home they can purchase using the same monthly payment.

Instead of paying $3,000 a month in rent to your landlord, did you know you can purchase a $550,000 home with only 10% down conventional jumbo financing with No monthly mortgage insurance “PMI”, for the same total monthly payment? Here is more information on how to qualify for this program (Click HERE).

Here is the example of a “Rent vs Own” report comparing owning vs renting for $3,000 a month. On the left column is the $3,000 in monthly rent.

On the right column, the buyers are able to purchase a $550,000 home with a down payment of 10% using conventional jumbo financing, and they can qualify for a interest rate of 4.125% with NO monthly PMI, and have a total PITI payment of $3,000 a month.

As you can see above, by owning a home, they will get to take advantage of tax benefits of $780 a month and also pay $697 a month towards principal, versus no benefits from writing a check for $3,000 in rent every month.

Rent vs Principal paid over 10 years

In this section of the report, it shows the rent versus principal paid over 10 years. You can see the buyer will have paid down the principal on their loan by $103,380over the next 10 years, whereas paying $411,821 in rent over the next 10 years.

Compare Net Worth in 10 years

In this section of the report it shows the buyers net worth after just 10 years of owning a home. The buyer will accumulate a net worth of $215,922 over 10 yearsfrom the financial benefits of home ownership.

These 3 main financial benefits to owning a home are, paying down the principal on the loan, substantial tax deductions at tax time, and accumulated equity gains due to appreciation on the property.

In this example I used a 3% annual appreciation rate. Whereas with renting, they will have a a zero net worth due to paying rent to their landlord over the next 10 years.

In Summary: Based on the information and figures above, I think it is fair to say that it makes better financial sense to own versus rent a home.

Here is an article you can review that explains how to qualify for the 10% down conventional loan program with No monthly mortgage insurance “PMI” (Click HERE), there is also a Q&A section in the article too. This program also allows for 5% of the down payment to be gifted too, in case a buyer is short on down payment funds.

The Impact of Lower Rates on Buyer Affordability

With rates continuing to move lower recently, it is important that potential buyers also understand the impact of lower rates on their purchasing power.

Changing mortgage rates do more to influence home affordability than changing home prices. Now that rates have been moving lower again recently, this is helping buyers regain some of the purchasing power they lost recently.

This is a chart that all buyers should review, that shows the “impact of declining rates on buyer purchasing power or affordability“. As you can see, when rates decrease by just 1%, a buyer gains 10% in purchasing power or affordability, or vice versa, when rates increase by 1%, a buyer loses 10% in purchasing power.

For example, see below how the payment at the 4% rate on a $400k loan, is roughly the same payment as the 5% loan at $360k, a gain of 10% in purchasing power for a buyer.

Why it’s a great time to buy a home

I think it’s a great time to purchase a home, especially as the cost of borrowing money is still on sale. Yes home prices are moving higher in some areas, but when you crunch the numbers and weigh up all the financial benefits that come with home ownership, and compare it to what you are paying in rent, you will be surprised how much home you can actually afford to buy in many cases.

A good idea is to talk to your accountant when you are doing your taxes, and ask them what the mortgage interest deduction and deduction for real estate taxes will do for your income, you will probably find it is now cheaper to own than to rent in many areas.

Remember too, when you own a home, it is also a hedge against inflation for the future too. When you own a home,you will get a low fixed rate mortgage and your principal and interest payment will never change. Whereas rent will continue to go up over time.

In this market, it is important that buyers are been given all the information they need so they can make an informed decision about buying a home. My clients love these “Own vs Rent” reports, because it shows them all the financial benefits and different figures they need to see when making the decision to purchase a home.

If you would like to review one of these “Own vs Rent” scenarios like this example above, please feel free to contact me directly at 858-442-2686. I look forward to chatting soon.

Tags: 000 a month. Compare owning vs Renting for $3k a month, Own vs Rent: How Much Home Can You Purchase For $3k a Month, won vs rent for $3
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