by Nick Molnar on August 21, 2007
Mortgage companies have been in the news lately: American Home Mortgage filed for bankruptcy protection, Countrywide is drawing on its lines of credit, and other companies are struggling as their creditors stop pouring money into the system.
This has significant implications for mortgage companies and for the economy as a whole, but what does it mean for individuals buying or selling houses? It seems to mean that the days of easy credit are over. People with poor credit are no longer able to get no money down loans at low rates. No document loans where you state your income but don’t have to prove it are becoming rare again.
If you are a buyer, or will be in the near future, it’s a good time to watch your credit. If your score is low, start working on it. “MyFico” is a great place to start. It lets you check your score and run scenarios to see how they would affect your score. For example, you can see which would help more, paying off the credit card, or paying it down in conjunction with your student loans. It’s also a good time to start saving. There will still be 100% financing options, but having a few percent of the purchase price you can use as a down payment or for closing costs could make the difference between getting the loan and house you want or looking in a different price bracket.
The “credit crunch” impacts sellers as well. Because there will be fewer qualified buyers, it will increase competition for them. Proper pricing, staging, and marketing of your home will become increasingly necessary. You or your agent will also need to check buyer financing to be sure the sale will go through. Sellers who accept a pre-qualification letter at face value without even a phone call may regret it when the program a buyer was approved for three months ago is no longer available and the house they thought was sold comes back on the market.
Has the mortgage shake up affected you? Please share your stories, and advice to others in the comments.
by Nick Molnar on January 22, 2007
Jeff Parrott has written an engaging two-part series about mortgage fraud in South Bend. You can read part 1 and part 2 in the South Bend Tribune (permalink). The article sidebars several simple suggestions on How to Avoid Mortgage Fraud including seek referrals and understand what you are signing. A practical suggestion is to be cautious of any real estate professional who doesn’t patiently and fully answer all of your questions.
You may want to also revisit this post to learn more about housing fraud.
by Nick Molnar on December 16, 2006
It’s Winter, school is in session, and the holidays are approaching. It may not seem like a good time to move, but there are a few compelling reasons you you should consider it, especially if you are currently renting. There are fewer buyers to compete with than in the Spring, there are a lot of great homes on the market, and mortgage rates are attractive.
Consider these two houses, each of which you could own for a monthly payment far lower than the rent on a 3 bedroom apartment at Castle Point.
418 Niles Avenue in Mishawaka (below left) has 3 bedrooms, hardwood floors, a porch, patio, basement and garage. It’s also across the street from Merrifield Park and the river. It’s listed for $90,000. Bill Rensberger of 1st Midwest Mortgage calculates that with no money down and good credit, using a “75-25″ 1st and 2nd mortgage your total payment would be about $641 a month including taxes + about $50 a month for hazard insurance. Total payment: about $691 a month.
1010 S. 35th St (below right) in South Bend’s River Park neighborhood. It has a covered porch, rear yard with new deck and shed, updated kitchen with stainless steel appliances, and lots of storage in an attic and basement. It’s listed at $92,000. Using the same assumptions (good credit, no money down and a “75-25″ mortgage) your payment would be about $646 a month including taxes. Adding the same $50 a month for insurance yields a total monthly payment of about $696 a month.
For more details about these houses, click on the photo of your choice. To see it in person, call or e-mail Nick, 574-309-3758 / nick@realst8.com.
by Nick Molnar on November 16, 2006
Although I try not to merely link to other sites in my posts, David Jackson’s series about mortgage fraud in Chicago is causing me to break my rule. It happens in Chicago, and South Bend, and across the nation. Thanks David for this superior journalism.
by Nick Molnar on August 17, 2006
Foreclosures have become a serious problem in Indiana, and have grabbed many headlines. The Indiana Apartment Association has leapt on that fact and launched a Web-site with an 18 question quiz that claims it will help you determine if you are ready to buy a home.
The questions are valid, though the apartment association is not out to encourage people to buy homes. When I took the quiz and answered honestly, I got the response “Renting is Right for Now.” Expect to see this answer unless you have perfect credit and have saved for a down payment…neither a description of the average homebuyer in the last few years.
Buying a house is a big deal and you should go into it with your eyes open. But don’t rely on anyone with a financial interest in your decision to be impartial. The US Department of Housing and Urban Development (HUD) is a better source of information. They host a Web-site about buying a home and, through their subsidiary Ginnie Mae, offer a Buy-vs-Rent calculator.
