South Jersey has a high water table and many areas are prone to flooding. Did your basement flood like mine last year? Here is some information to consider if you are thinking of getting flood insurance:
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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®
Here is some basic information about how to begin searching for a home loan. Like shopping for a car loan, it is important to know some facts about the process first and examine all your options.
A. Know Your Options – There are many places where you can look for a home loan. You have many options in addition to asking at your local bank or using the lender your real estate agent suggests. Other banks, savings and loan associations, mutual savings banks, and mortgage companies all offer home loans. Each of these lenders has different prices and rates. You should shop around for the best prices that fit your needs. There are many types of loans and loan programs available. If a lender denies you for one type of loan, check to see if you might qualify for another. Get familiar with terms like FHA loan, VA loan, conventional loan, private mortgage insurance, ARM and fixed rate loans. There are also special programs available for veterans and first-time home buyers. Don’t be discouraged if you are turned down by one lender. Try several more and make sure that you are provided with information about all of the options each lender offers.
B. Know Your Credit Information – Lenders will examine your credit report and score to determine if they can trust you to pay your bill on time. Check your credit report for any errors in it that may compromise your ability to secure a loan. For example, are there bills on your credit report listed as unpaid that you have actually taken care of? Fix these types of mistakes. You can get your free credit report at this website that is sponsored by the three credit reporting bureaus: https://www.annualcreditreport.com/cra/index.jsp
C. Know Your Finances – Lenders look at how much income you make before taxes each month and compare it to how much all of your monthly expenses are. They want to make sure that you are able to pay for all of your long-term bills with money to spare before giving you the extra burden of a home loan. Lenders often use ratios of income to expenses to determine if you will be eligible for a loan. A common ratio is 28/36. 28 means that lenders will allow your total housing expenses (mortgage, taxes, and insurance) to add up to 28% of your gross income for the month. When this amount of bills is added to your other monthly payments on your debts (car note, credit card, other loans) the total amount of expenses you have must not add up to more than 36% of your monthly gross income.
Here is a simple example: You have a gross income (before taxes) of $6000/month. A 28/36 ratio would mean that your housing expenses could be no more than $1,680/month and your total monthly debt expenses (loans, credit cards) could add up to no more that $480/month in order to qualify for a loan. Here is a worksheet that will help you calculate this ratio before you start looking for a loan. Getting this information together before you start shopping for a mortgage will help you determine how prepared you are to make payments on a house.
For more detailed information, visit the Federal Reserve website, the main source for the information in this article.
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Copyright 2011 NATIONAL ASSOCIATION OF REALTORS®
The population of the United States is migrating to the South, according to the 2010 census report. This is old news because increasing growth in Southern and Western states has been the status quo for many years. After a two long, cold winters in a row, you can hardly blame anyone from our area for wanting to pack up and move to where it is warmer and less expensive.
The census bureau’s report noted that Texas, California, Florida, Georgia, North Carolina, and Arizona all had an increase in population of over a million people in the past decade. This explosion of growth made up more than half of the total population growth of the country.
If you are trying to decide on one of these state as your new home, here are the top six cities to live in of the fastest growing states in the U.S. Each of these cities is featured on CNNmoney.com as one of the top 100 best places to live in 2010:
1. Allen, TX
2. Irvine, CA
3. Cary, NC
4. Gilbert, AZ
5. Coconut Creek, FL
6. Roswell, GA
With the economy forcing many homeowners to scale back, it seems that homeowners are attracted to more functional designs that will allow them to make better use of the space they already have. If you are thinking of redecorating, here is a list of some of the new housing design trends at the start of the decade.
- Appliance drawers – dishwasher, refrigerator, and microwave drawers to fit in small spaces. Also, 24’’ deep refrigerators – no deeper than your counters.
- Smaller homes – new homes being built may have less square footage with the emphasis being on quality not quantity.
- Motion detector faucets – in your house, not just your local restaurant bathroom.
- Open floor plans – this is actually an old new trend. Designers still favor more room to breath.
- LED lighting – lasts longer, replaces incandescent or fluorescent lights.
- Going “green” – people are looking to have “green” touches in their homes. For example, tankless water heaters, kitchen cabinets with built-in recycling bins, better insulation in attics to promote energy efficiency.
- Heated floors – Electric heated floors keep you comfortable all year round.
- Home office space – more people working from home require an extra room or even two for home offices.
- Dual shower heads – multiple heads and body sprays in a tub-less shower.
- Inside out – making better use of the yard by adding a fire pit, furniture, a kitchen, perhaps even a place to sleep.
- Maya David
Parke Place Realty
(Sources: SFGate.com, Cyberhomes.com, Realtor.org)
The rising number of foreclosures and their adverse effect on the housing market may cause Congress to pass “cramdown” legislation in an effort to boost the economy. This type of legislation in the past has been knocked down by lenders because it poses a threat to their potential profits. However, cramdowns are part of Chapter 12 bankruptcy codes relating to farmland and have been helpful in keeping farmers on their land.
According to TeachMeFinance.com, this is the definition of a cramdown:
cramdown — a court-ordered reduction of the secured balance due on a home mortgage loan, granted to a homeowner who has filed for personal bankruptcy. In a cramdown, the bankruptcy court splits the outstanding mortgage balance into two parts. The amount of debt equal to the current appraised value of the home is treated as a secured claim, which the borrower must continue to pay. The amount of debt in excess of the current property’s value becomes an unsecured claim, which is usually not repaid in full. In areas where home prices have depreciated, cramdowns can result in significant mortgage reductions. In some cases, the judge may order the remaining secured debt amortized over the remaining life of the loan term, thus lowering monthly payments. In other cases, monthly payments remain the same as before the cramdown, and the secured mortgage is simply paid off faster.
Cramdown legislation would force lenders to only collect money on the actual value of the property, not the higher value of the property when it was originally sold. This is seemingly a more fair way of dealing with the borrowers debt. The borrower still will pay the lender the value of the property as it stands presently, which is all the lender would get anyway should the property go to foreclosure. Everyone wins in this situations. The lender gets paid while avoiding the legal process of foreclosure and the borrower is able to keep the property.
If the idea seems good to you, like it does to me, perhaps it’s time to call your Congressman.
Foreclosure sales are the driving force behind the housing market.
Who cares, right? My bills are paid on time… Wrong. A neighborhood foreclosure hurts the former owners and everyone else who lives nearby because the low, low sale price of the distressed home will pull the value of surrounding properties down with it into a hole. Here’s another chilling fact: in the fourth quarter of 2009, distressed homes sales accounted for 45% of all home sales in the country. Ouch.
What happened? Early last year the housing market was held up by a federal tax credit, low mortgage rates, and the hope that the HAMP (Home Affordable Modification Program – an Obama administration creation) would keep more people in their homes and take some stress off the backs of worried buyers. In the middle of the year the tax credit expired and with it went the idea that the housing market was ready to stand on its own two feet.
The HAMP loan modifications have not stimulated the amount of growth in the housing sector that is needed to boost the economy. So far, about 500,000 loans have been modified. However, this number seems small when compared to the 2.8 million foreclosure notices that went out to homeowners in 2009. This year demand for housing has fallen off even further and a disproportionate number of homes are sitting on the market unsold.
This maelstrom of foreclosures plowing through the housing market is trampling down home values across the country. There has already been a steep 25% decline in prices since the housing bubble burst in 2006. This trend will most likely continue over the next near with an expected 5-10% drop in already depressed home values. The lingering fear is that these projections may be too conservative. This has led the Federal government to begin looking into whether or not to step in again should these lower home prices and foreclosures press the housing market into another dizzying downward spiral.
(Source: The Wall Street Journal)