Georgia Mortgage Blog

Its hard to sit back and say that now is not a good time to buy a house if you are capable. However there are so many fear factors about our economy and employment, that it is understandable to be worried and even hesistant to move forward in the home buying process. We are still in the midst of a recession, which investors and the government would like to gloss over, and unemployment in our nation is still over or at 10%. Both are large factors when an individual considers moving up into the ranks of home ownership. Yet, at the same time, there are also many positives for potential home owners that need to be considered before shutting the door on the idea.

Yes, the housing market and home values are down compared to 5 years ago. We have seen housing markets have declines in home values across our nation. We have seen new home construction come to a screeching halt in many markets. Foreclosures and short sales have been on the rise over the last 18 months. Builders have lost large sums of money and in many cases have lost there businesses completely due to changes in our lending markets. But let's consider this. Right now is a great time to find an affordable home at below market value. Also, if you review the trend of the housing market over the last 50 years, you will see that the bubble on value has burst before. You will also see that it has always come back. On average, housing values have annually risen at close to 3%. In other words, the real estate market tends to fluctuate much like the stock market. In the end it has risen over time.

The lending world has been turned on its ear. The old saying of "if you have a pulse, you can get a loan" has been changed to "you better have good credit and I better be able to prove everything on paper." Many people feel like the stiffer lending guidelines will make it impossible for them to qualify for a home loan. They also think if they are not capable of a large, 20%, down payment they could never get approved for a home loan. These things are not true. Yes, guidelines have changed and they have changed for the better. Gone are the days when a person could get into a home that they simply cannot afford. this is a positive change and we need to see it as such. There are still programs available for home buyers with little to no assets that make it possible to purchase homes they can afford with little to no downpayment. And, it should not be viewed as a negative for home buyers to make a downpayment on their purchase if required or desired. Investing into your home is a positive. Your home helps you build wealth over time, and I can't ever see that as a bad move.

With the lending side of things in mind, rates are of course one of the most talked about aspects. That is with good reason. They are at all time lows, still. If you are able to get a fixed rate in the 5% range or even in the 4% range, that is incredible and should be viewed as such. It will not last forever. As our economy grows out of its current slump, inflation will set in. With that, rates will rise. It is only a matter of time. The magic questions is when. If you feel like they will last much longer, keep in mind that our government has been helping keep them down over the last year or so by buying mortgage back securities. They have annouced this will end. And, if you have heard anything lately about the state of our governments pocket books, you could understand that it has to end. But, they have managed to keep the rates artificially low and it is up to the consumers to take advantage of it while they still can.

What about the "free" money the government is handing out right now for home buyers. It is a tax credit and not a straight check, but for many it equals a large return when their taxes are filed. It has also been widen to include previous home owners and not just first time home buyers. This program will also end soon. Again, the government will have to end it soon due to the fiscal responsibilities it has for the nation as a whole. So if the money is there now, much like the low rates, it is up to consumers to take advantage of it while it lasts. All good things do come to an end.

The fears consumers face when considering the economy and the state of our unemployment rate is understandable. The idea of continuing to rent and using that as the main reason behind it is not. To live anywhere, unless you own it outright, is going to cost you on a monthly basis in either rent or a mortgage payment. How you use your money to work for you is completely in your hands. There are many cases where a mortgage payment on a modest home can be less than the rent payment you are currently making. Take time to consider home ownership before letting fear keep you out of the one American dream all people are able to attain. Speak to a mortgage professional and find out if you are able to start down the home ownership path. The answers may surprise you.

Brought to you by the Tallman/Bland Mortgage Team at Mortgage Solutions of Georgia, LLC.

For more information please check WhentogetQualified or ContactUs.

If you would have asked me 10 years ago if I could do a USDA loan for you to purchase the home you were viewing, I would have asked you if you were planning on raising cattle. Like a lot of loan officers at that time I would have encourage you to use the FHA program instead along with gift funds for the down payment. The fact is both are great loan programs for first time home buyers with little to no resources, but the desire to own their own home. USDA loans are growing in popularity today and are being used to purchase homes not only in country settings, but also in neighborhood and surburban areas that qualify.

The USDA program is truly a Rural Housing Development loan program designed to help low to moderate income buyers purchase homes in "rural" termed areas. The biggest questions that arise is what makes an area rural. It does not necessarily mean a home must be located off of a dirt road in the middle of the wilderness. Rural locations are determined by population density. This brings a new understanding to the idea behind the homes that may or may not qualify. USDA makes it very easy to check on home qualifications by making the information public on their home page for anyone to view. You can simply follow this link http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do and follow the instructions to check on individual property eligibility or even view large area maps that display the outlined limits for approved areas.

Another aspect of USDA loans are the income limitations that are set forth for the program. Unlike other loan programs, buyers cannot make too much money. This is a concept that most people find mind boggling, but this program was designed to help low to moderate income individuals. This is clearly the case when you consider USDA offers 100% financing, no monthly mortgage insurance, requires no reserves, and offers competitive markets rates on 30 year fixed loans. The income limitations vary by the market area and are based on the size of the family members who will be living in the home. Tax returns must always be provided when applying for these loans and the income limitations are strictly enforced. Working with a loan officer who understands these guidelines is extremely important. It is often easy to make a mistake on qualifying income and end up with a loan file that must be restructured. The USDA website also offers an easy income qualification option.

The USDA program is a unique finance option for individual buyers to be aware of. With the flexibility of the 100% financing coupled with it being a friendly first time home buyer loan, it will surely grow to become one of the most used loan products of the future. But remember, working with an experienced mortgage professional is key to a smooth and productive experience.

If you would like any more information about these types of loans, please check USDALoans or ContactUs.

This article was brought to you by the Tallman/Bland Mortgage Team at Mortgage Solutions of Georgia, LLC.

FHA is announcing changes today for future FHA originated loans for 2010. This is being done in an effort to stem the rising defaults in the agencies back loans, which have risen during the current economic downturn. The agency has been  under pressure to "shore up" their finances over the last couple of years. The FHA loan program has been a very popular choice for borrowers over the years with all of the changes the mortgage market has gone through. It offers the ability for many lower income and lower credit rated borrowers to purchase homes at affordable rates.

Some of the changes include an increase in the up front funding fee required by FHA. The current fee is 1.75% of the loan amount which was an increase from the original 1.5%. The new fee will be 2.25%, according to recent posts and comments, and the agency is looking for approval to hike its on going monthly premium charge as well. Both changes would be a direct attempt to increase the agency's reserves.

Another change would be an increase in down payment requirements for borrowers with lower fico scores. There is a proposal to increase the current requirement of 3.5% to 10% for borrowers with credit scores under a 580. Most do not see this as having a major effect on the loan market since the average credit score as of late has been closer to a 693.

An item that may have more of an impact on the amount of funds required at closing by the borrower would be the reduction in the amount of closing costs the seller is allowed to cover. Currently, sellers are allowing to cover up to 6% of the sales price in closing costs. This may be reduced to 3%, which is closer to requirements in place on many conventional loan products. This could directly affect home buyers with limited funds and reserves.

All of this is being done to decrease the growing default ratios seen with FHA insured loans and to try and increase the agencies reserves back to the 2% cover ratio mandated by Congress. The fear would be to add another blow to an already down turned economy and beleaguered housing market. We would not want to see FHA take away its ability to help borrowers who may not get the opportunity to own a home on other loan programs. Home ownership is not a right, it is a privilege. But with that being said, everyone deserves a chance to achieve that goal.

If you would like more information on FHA loans, please check FHALoans or ContactUs

This was brought to you by the Tallman/Bland Mortgage Team at Mortgage Solutions of Georgia, LLC.