Bradenton Florida Real Estate News

Friday, October 05, 2007

Self-Employed? It's Harder to Get A Mortgage

USA Today ran a story on how it's more difficult for self-employed people to get a home loan today. Many lenders have closed their doors entirely. And many lenders that still offer such loans have tightened their standards, making it harder for self-employed borrowers to qualify.

Here’s what self-employed borrowers need to qualify for a mortgage in this new environment:

More documentation. Along with two years of tax returns, self-employed borrowers might be asked to provide a profit-and-loss statement, bank statements and proof that they’ve been in business for at least two years. A letter from their accountant probably won’t be good enough.

Fewer tax deductions. Self-employed workers who plan to buy a home in the next year or two might want to forgo some deductions. Show as much income as you can.

Larger downpayments. An old-fashioned 20 percent down is very persuasive.

Excellent credit. A credit score of 720 or higher will give a self-employed borrower some choices.

Patience. Even for well-off business owners, qualifying for a mortgage is not that smooth, easy no-brainer like it used to be. If you want it to be quick, you’re paying a higher price.

Source: USA Today, Sandra Block (10/02/2007

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Monday, July 16, 2007

The Steps to Buying a Home

Once you zero in on the home you want to buy, what do you do next? The steps to buying a home or a condo are essentially the same. This article will cover the buying process.

Step #1 – Make an Offer. If you are working with a Realtor, he or she will be able to guide you through this step and all the other steps as well. If you are working without a Realtor, you will probably want to hire an attorney to help you with this step. The attorney will charge you a fee. The Realtor, of course, is paid from the commission paid by the seller, so their services are free to you.

How much should you offer? You will need to find out what similar homes in the same neighborhood are selling for. Information from the local Multiple Listing Service is accessible to your Realtor. They can review the sold properties with you to determine a target buying price. The public tax rolls will also have information on homes that have been sold without a Realtor.

Another factor to consider it the list-to-sale-price ratio. Are homes selling on average at 90% of the asking price, or 98% of the asking price? This may give you a clue as to how much of a discount the seller is expecting to make.

The offer will include the purchase price, deposit amounts, closing date, inspection periods, other clauses and contingencies. All of these items are negotiable. It is best to seek the help of a skillful Realtor or attorney.

In Florida offers may be made verbally, but only written offers are enforceable. A written offer presented with a deposit shows the seriousness of the buyers and is recommended.

Step #2 – Negotiating and Counter Offers. When your offer is presented to the seller, they will have three options. First, they may reject your offer. If your offer is extremely low and insulting to the seller, this may be their response. Second, they may accept your offer. In most states, if your written offer is accepted and signed by the seller and delivered back to you, it is then binding on both parties. Accepting your offer means the seller makes no changes to the offer whatsoever.

Thirdly, the seller may propose a counter offer. Any change to your offer from the seller is considered a counter offer. Most of the time counter offers focus on important areas like price, deposit amount, closing date, and contingencies.

When the sellers counter offer is present to you, you now have the same three options. You may reject it, accept it, or counter it. This can go back and forth several times until all parties either come to agreement or give up.

In my own real estate practice I usually suggest that we do these negotiations verbally once the original written offer is presented. The advantage to doing it verbally rather than creating a written counter offer each time, is that the negotiating process can be handled by phone and consummated rather quickly. The quicker everyone can come to agreement, the more likely you are to succeed.

Most negotiations can be handled within twenty four hours. I have seen negotiations settled in a matter or minutes while others have dragged on for days. Again, having sold thousands of homes, the quicker you can respond to an offer or counter offer, the better your chances are at succeeding.

Once the contract has been executed by all parties it is now binding. You then enter the contract to closing stage.

Step #3 – Between Contract and Closing. This period may last from a few days to several weeks depending upon the situation. If it is a cash transaction, the buyer can be prepared to close in a few days. If the buyer is using a mortgage it is going to take the lender anywhere from two to four weeks to complete the process.

This is also the time for inspections. Most contracts provide for a home inspection and a termite inspection. These inspections require several days to order, perform, and report. Most contracts have specific time periods and guidelines for these inspection periods. The purpose of the inspection is to evaluate the condition of the property and to make sure it is as advertised by the seller.

Most states have disclosure laws which require the seller to disclose anything about the property that might affect its value. But sometimes the seller is unaware of problems like roof leaks, settling, and other problems. The few hundred dollars charged by a home inspector is well worth the service.

During this time the Title Company or attorney will perform a title search to make sure the seller can deliver clear title to the buyer. They will also be sure the property is free of liens and encumbrances. The will also prepare all of the documents needed for closing.

When the buyer’s lender is ready, they will send the mortgage package to the Title Company for the day of closing. This package contains the mortgage, the note, and all the documents needed to fund the loan.

Finally, and usually the day before closing, the buyer may conduct a final walkthrough of the property to make sure that repairs have been completed and that nothing has changed about the property. The contract should spell this out.

Step #4 – The Closing. The day of closing is noted on the contract. The hour of closing is coordinated between all parties. The closing agent and the Realtors usually coordinate this. On the day of closing documents are signed to transfer ownership of the property from the seller to the buyer. In Florida, the closing is usually attended by the seller, the buyer, the Realtors, and the closing agent. Rarely does the lender attend the closing. Most closings are held at Title Companies. Some are conducted by attorneys.

Some closings are what we call “mail away.” If the seller or buyer is unable to attend on the day of closing, the documents may be prepared in advance, over-nighted to the party, signed and over-nighted back in time for the closing.

The closing usually takes about an hour or a little longer. The buyer usually brings any funds which are required to close and the seller receives a check for their proceeds. The Title Company coordinates the loan documents, tax payments, and any other expenses related to the transaction.

Your Realtor will receive a copy of the settlement statement before the closing. They can review it with you and help you be ready for the closing hour.

At the closing table keys are usually passed from the seller to the buyer. Congratulations are offered and well wishes shared.

These steps may vary across the country, but most areas are somewhat similar. Unless you are thoroughly familiar with the process, I recommend that you involve a Realtor. Realtors are experts at guiding you through the process and will help make sure that everything is handled properly and professionally.

Note: read more about buying a home on my website.

I'm Dan Forbes and I want to be your Realtor and resource for all your Bradenton Real Estate needs.

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Monday, May 14, 2007

UF professor says now is time to buy

UF professor says now is the time to buy

Grant Thrall, a University of Florida land economist, said he believes the state's real estate market is poised to rebound in the not-too-distant future. But first, Florida's Legislature has to get its act together on taxes and insurance.

'Without insurance, you can't get a mortgage, and without a mortgage, you cannot buy a house,' Thrall said. '

If potential buyers think they will either not be able to obtain insurance or believe they will lose their insurance, they won't bother looking or buying in Florida.

'As to taxes, unless millage rates are rolled back and Save Our Homes benefits become portable, Floridians will not trade up into bigger houses or trade down into smaller ones. They will just stay put, he said, and that hurts real estate agents, mortgage brokers, bankers, title agents, appraisers, lawyers and anyone else involved in real estate transactions.

Thrall is convinced that state lawmakers will make the right choices, and once they do real estate prices will stop falling and start climbing again.

Adding to the rise will be the return of the baby boomers.

Part of the reason prices spiked upward so sharply during the boom is that the period coincided with a massive transfer of wealth from the World War II generation to the baby boomer generation -- people born from 1946 to 1964.

'Because prices were rising, many baby boomers rushed into the market, figuring if they did not buy soon, they would forever lose their place in the sun,' Thrall said.

'Housing builders responded with supplies of housing. But the peak of this intergenerational wealth transfer passed, bringing a slowing Florida second home market, softer prices and less urgency to buy.'

Now there is a large inventory of unsold homes hanging over the market. But Thrall thinks that inventory will be depleted quickly as baby boomers start thinking about retirement again.'

Aging is inevitable,' Thrall said. 'Baby boomers' numbers are legend, and baby boomers will eventually seek a place in the sun.'

So anyone who wants a good deal on a house, Thrall said, had better buy before that massive wave of buyers gets geared up again.


Bradenton Real Estate

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Thursday, March 15, 2007

Some buyers having trouble getting a mortgage now

Last week Freddie Mac, the second largest government backed mortgage underwriter, made some significant changes to its underwriting guidelines. Concerned by their potential exposure to non-performing loans as the number of borrowers defaulting is increasing sizably, they tightened the parameters required for Freddie Mac to purchase these loans from the originators. The investors who buy Mortgage Backed Securities on Wall Street are fearful that their portfolio of loans will default and they will be left holding the bag. The shocking statistic I read last week was that almost 50% of the mortgage loans currently held by Freddie Mac would no longer qualify under the new guidelines.

What does all of this mean to you…

Sub-Prime lenders are scrambling to accommodate the new Freddie Mac guidelines. I’ve received multiple notices from lenders whose product lines are being pared down or eliminated to meet the new conditions and demands coming indirectly from Wall Street. A few days ago was news that New Century Mortgage is tittering on the brink of bankruptcy, looking to join competitors who have already closed their doors:
Own it Mortgage - closed its doors
Sebring Mortgage - closed its doors
Axis Mortgage - closed its doors
Oak Street Mortgage - closed its doors
Right Away Mortgage - closed its doors
Secured Funding - closed its doors
Encore Credit - closed its doors
Acoustic Home Loans - closed its doors due to a sudden increase in repurchases
Ampro - gone acquired by United Financial Corp.
Silver Trust - closed it's doors
Freedom Mortgage - not doing 2nd TD's anymore.
Decision One - closed 6 regional centers. Division of Option One.
Mortgage Lender Network (MLN) - "stopped funding residential loans" on 12/29 (they didn't actually say they were closing) but they have closed.
E-loan - announced it will close their sub prime wholesale division
Meritage - Sold to Lime Financial
Mandalay - Closed it Doors
Plus rumors of others struggling financially

Action required…

If you have a transaction which will require Sub Prime lending, my strong recommendation is to consult with your mortgage specialist immediately to confirm the program still exists and if it does, lock it right now before that changes. I know I’ve filtered my pipeline to ensure no one is surprised down the road.



Bradenton Real Estate

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