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IT'S A GOOD TIME TO BUY
How to buy a home at a $100,000 discount
With nearly 150,000 foreclosed homes on their books, Fannie Mae and Freddie Mac are trying to pare down their growing inventory of repossessed properties, in turn providing home buyers with tremendous purchasing opportunities.
MAKING SENSE OF THE STORY FOR CONSUMERS
- An analysis by SmartMoney magazine found that home buyers could save $100,000 on the price of a home by purchasing a foreclosed home owned by Fannie Mae or Freddie Mac as opposed to a similar fair-market property just a few blocks away.
- Fannie Mae’s homebuying program, which requires down payments as low as 3 percent on 30-year mortgages also can help buyers save money. However, buyers should note, smaller down payments generally translate into higher monthly mortgage payments.
- Another bonus to purchasing a Fannie Mae-owned home, the company doesn’t require private mortgage insurance, which most lenders require for buyers who put down less than 20 percent.
- Unlike many foreclosed properties, which usually require many repairs, Fannie and Freddie generally repair items such as leaky roofs and damaged electrical work, and often handle small projects like replacing appliances that are broken or missing, replacing old carpet, or fixing damages left by the former owners or vandals. Additionally, Fannie Mae’s properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements.
- Buyers of Freddie Mac homes who plan to be owner-occupants –those who plan to live in the home and not use it as an investment property—have the advantage of viewing properties 15 days earlier than investors who often pay all cash and buy up foreclosed properties before owner-occupants have a chance to view them.
Read the full story.
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To provide good information for you about buying a home now, let's try and make a little sense of this crazy, and a little scary market.
LOOK BEFORE YOU LEAP
Your first step is research. Real estate markets are local; there are not just cities, but sub-cities. Neighborhoods are right next to each other; and one may be improving while the other is dying. Get in your car and drive around. Get a feel for the areas and tracts. Next, get the help of the smartest broker in town. This person will know how long homes have been on the market, what the homes nearby were listed for and how much they actually sell for. (If you're considering buying a foreclosure, consult a realtor that is very knowledgeable in bank owned properties, to hand hold you through this process.) Use the information to make an informed offer.
MAKE SURE YOU HAVE THE MONEY
Lenders use to adhere to stringent guidelines, among them the requirement that no more than 36 percent of your monthly income be used to cover your total debts, including your mortgage payment. During the houseing boom, that debt-to-income ratio was pushed to the wayside. Down payment requirements all but vanished. The sky was the limit.
Those days are over. 12 million homeowners are in danger of foreclosure and lenders have learned their lessons. As a result, credit is tighter than it has been for years. It's not that you can't get a loan, but you likely can't get an attractive one if your credit is less than pristine. And even if its is, the hurdles you need to jump over are dramatic: The maximum debt-to-income ratio has returned to 43 percent. Down payment requirements of 10 percent or more are back. For people with the best credit, the 30-year fixed-rate mortgage is now about 5.36 percent; on a $300,000 loan, that's a monthly payment of $1,638.
How much of a house can you afford? There are two things to consider. First, the down payment and second, take a hard look at your monthly budget: Your housing expenses should account for no more than 35 percent of your income. The biggest mistake buyers make is to look at the mortgage payment, factor in taxes and insurance, and think that's the total. You need to consider that you'll want to decorate, landscape and heat and cool the place. YES, there will be utilities to pay every month.
Dave, have the pulse on the real estate market in the desert. Give him a call today and he would be more than happy to help you with any of your real estate needs.
DAVE BIENEK
Phone: 76760.625.7796
Email: Dave@DaveBienek.com
Web: www.DaveBienek.com
Fax: 760.771.6760
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