Value-Rite Appraisals Inc Blog

• YOUR REALTOR® can help you determine how much home you can afford and often suggest ways to accrue the down payment and explain alternative financing methods.
• In addition to knowing the local money market, YOUR REALTOR® can tell you what personal and financial data to bring with you when you apply for a loan.
• YOUR REALTOR® is already familiar with current real estate values, taxes, utility costs, municipal services and facilities, and may be aware of local zoning changes that could affect your decision to buy.
• YOUR REALTOR® can research your housing needs in advance through a Multiple Listing Service--even if you are relocating from another city.
• YOUR REALTOR® can show you only those homes best suited to your needs--size, style, features, location, and accessibility to schools, transportation, shopping and other personal preferences.
• YOUR REALTOR® often can suggest simple, imaginative changes that make a home more suitable for you and improve its utility and value.
• YOUR REALTOR® can assist you when purchasing a newly built home by protecting your interests and guide you along the right path. I can suggest builders with reputations for delivering a high-quality product, responding quickly to issues, and being financially sound.
• YOUR REALTOR® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS® have access to a variety of informational resources. REALTORS® can provide local community information on utilities, zoning. schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
• When selling your home, YOUR REALTOR® can give you up-to-date information on what is happening in the marketplace and the price, financing, terms and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
• YOUR REALTOR® markets your property to other real estate agents and the public.
• YOUR REALTOR® can guide you through the closing process and make sure everything flows together smoothly.

• Your home was built between 2004-06: There was a shortage of drywall during this period, so more than 500 million pounds was shipped in from China.
• Your home has a foul smell: Homeowners with Chinese-made drywall complain of a strong odor of sulfur, or what smells like rotten eggs.
• You notice metal and copper corroding: Chinese drywall is reported to corrode metal and copper, notably air-conditioning coils and electrical wiring, with a black coating.
• You identify your drywall as made in China: Some affected drywall will state it is made in China. Other Chinese drywall bears the mark of manufacturers, including Knauf Plasterboard Tianjin, Knauf Gips, and Taishan Gypsum Co.
• Lennar Corp., Aubuchon Homes, Meritage Homes, Ryland Homes, Standard Pacific Homes, Taylor Morrison and WCI Communities are all builders confirmed to have used drywall imported from China.

It seems like every day someone is asking about why it is so hard to get a real estate loan. Just two years ago anyone could get a loan to buy a house. Well, these times they have a changed and rules from the lenders have changed right along with the times.

Think for a second of home loan guidelines being similar to the old pendulum clocks. Just a couple years ago the pendulum was to the left, and it was probably too easy to get qualified. But now the pendulum has swung all the way to the right, and it is very difficult to get qualified. Often, the lending industry swings its requirements from one extreme to the other without stopping at a sensible middle ground. For now we will not explore the cause of this change, only the new requirements. Keep in mind though that these will change over time as well, hopefully to a more moderated middle ground but only time will tell.

For those looking to get qualified in this tough market, please note the criteria below:

Fico Scores
These must be better than average (600+), and when the credit report is run there must be no Bankruptcy (BK), and likely no "collections" of accounts will be allowed.

Down Payments
Buyers must have some money to put down, no longer will the lenders approve 100% financing, most likely the lenders will require 10-20% down (except FHA which allows only 3% (3.5% in 2009)).

Ample Income
All income will need to be verified with pay stubs two year period and IRS and State tax filings for 2-3 years. Then they will calculate your debt-to-income ratios (looking to see that you can really make the payments). Each lender has different ratios they will pass or disqualify with. As a general rule, these days they are wanting to see much smaller debt-to-income ratios. In other words, the banks want to see borrowers with more income and less outstanding debt obligations.

Stated Income
This (with no verification) is no longer available, meaning quite a hardship on the self-employed, but lenders are very risk averse now. The only exception is if buyers have a very hefty down payment like over 30%.

Proof of Funds
A few months worth of recent bank account statements will be required to show that money is really available for closing costs and down payments.

Reserve Funds
Many lenders require that the borrower have reserve cash on hand to cover two to six months worth of payments.

Non-Occupants
If the property is not going to be the home of the borrower (like a rental) then most lenders will increase the interest rate on the loan.

Limited Holdings
Restrictions are also placed on many borrower that this property will not increase their rental holdings to more than 4 units. Lenders are very suspect of investors that might be over leveraging themselves.

Obviously, only very qualified people can meet the above criteria, and that is just what the lenders want in a time of uncertainty and massive losses. For the time being they can’t justify making any more high-risk loans. Hopefully, knowing what is needed in advance to get approved, buyers will understand that it is critical to prepare early and get their ducks in a row before starting the home buying process. For those lucky enough to be qualified in today’s market, a wide range of opportunity awaits them.

Got a Question call us.

Mortgage modifications have been around for years, but those recent relief efforts have raised the profile of the mortgage workouts as an alternative to foreclosures, short sales, auctions, and bankruptcy.

The demand has opened the floodgates of loan modification services now offered by real estate agents, mortgage brokers, attorneys, government agencies, lenders, and other professionals.

No matter where they start, homeowners seeking mortgage modifications are at the mercy of lenders. The workouts are often voluntary and, completed on a case-by-case basis, they frequently come without standardized procedures.

Homeowners are finding it tough to know when a modification will work and how to best obtain one.

What is a mortgage modification?

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan.

Modifications are generally lender fee-free and involve the lender or loan holder lowering the interest rate and or changing an adjustable-rate mortgage (ARM) to a fixed rate mortgage (FRM) with a 30-year term. Some form of mandated homeownership counseling generally comes with the deal.

Less common loan modifications include adding missed payments to the loan balance and extending the term of the loan. Least common is getting the lender to reduce the principal or wipe out any second mortgages.

A mortgage modification is not a refinanced mortgage -- a brand new loan written to pay off the old home loan.

"A mortgage is one of the most complex transactions there is. A loan modification is also a gray area for a lot of people. So of course people need someone to walk them through the process to tell them this is what you need and this is what you don't need," said Ginna Green, spokeswoman for the California office of the Center for Responsible Lending in Oakland.

Is a loan modification for you?

Greg Pennington, a San Francisco-based mortgage banking consultant and counselor with Parker-Pennington Enterprises, says a loan modification isn't for everyone.

A loan modification may not be viable if:

• The modified loan comes with payments you still can't afford.

• Your current interest rate is already low and there's no room for the lender to lower it further.

• You can make the new payments, but the mortgage balance is greater than the value of your home and you don't plan on staying put long enough to reverse the loan-to-value imbalance.

• You have not already missed payments on your mortgage or can't show financial hardship due, say, to job loss, pay decrease, illness or interest rate increase.

• You have other properties, investments or assets that could be liquidated to cover your mortgage debt.

• A short sale (The lender forgives a portion of the debt owed if you can find a buyer), bankruptcy, auction sale, refinance or other approach, short of a foreclosure, is a better option.

"You can do a loan modification and not be aware of where you stand. You can get a loan modification for a home you don't want to be in," said Pennington.

A financial, housing or credit counselor can help you determine your best option. Just be prepared to hold down the fort for the 60 to 90 days or more it could take to complete the modification, due to potential complications and document processing times.

In addition to this you made need a current appraisal to show the most recent value of your property.  This is were we can help.

Contact us at Value-Rite Appraisals Inc.

Many of my friends, prospects and clients have seen their debt rise, their home equity decrease, their savings/investments decrease, their credit scores worsen and their ability to earn more money decrease. Sounds like you or someone you know?

There is hope, even in these tough times. There are some simple steps that you can take to get your spending in control and make serious headway on your debt.

First you need to be determined to see change. You need to resolve to do whatever it takes to see your debt eliminated, AND you need a plan. Here are a few steps that you can take.

1) Vision - Write a paragraph or two describing how it feels today to be in your current situation. How did you get here. Were there obvious mistakes that you made? Write a couple more paragraphs about how you would feel to have that debt eliminated, your credit restored and extra money at the end of the month.

2) Budget - Write down your known expenses and try to get a handle on the cash that slips through your fingers. Be brutally honest about the discretionary expenses, you know, food, coffee, soft drinks, smokes, magazines..... this is an area that you will be able to reduce spending in to accelerate debt reduction.

3) Debt Spreadsheet - Get some graph paper or use an excell spreadsheet and add each debt that you have. These are the fixed expenses with a start and stop date. Also include credit cards, but not utilities, or things like that. make sure that you include the balance and the payment. Use the minimum payment, not the amount that you normally send.

4) Debt Reduction - Add up your monthly minimum debt payment (the total of all your minimum payments) and add any additional funds that you can allocate to pay your debt down. Each month pay the minimum due on all of your bills except one. On that one pay the extra amount. Keep doing that each month until you have paid of one of your bills. Next month you will have additional funds available to be applied to debt. Keep doing that until you are left with just your mortgage. Now you can start applying a good deal towards either savings or the principle on your home.

                     HAVE A GREAT 2009!!!