Getting a Loan in Today’s Environment Is Easier Than Most People Think

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We often get asked about the ease of getting mortgages and it’s an understandable question given the rollercoaster ride our industry has faced since 2007. But today, things are a lot different than they were just a few years ago. Banks are still particular but they are not afraid of lending. In fact, they have plenty of money to lend.

The real question is “how has the process changed?” and also whether or not it is actually difficult to obtain a mortgage. And the answers will surprise you. Not only is the process to obtain a mortgage easier than most people seem to think but also it is really not too much more a changed process than a few years ago.

Banks Are Simply More Cautious

It used to be that most people could walk into a bank, present their ID and almost literally walk out with a bank note and keys in hand. Well, ok not exactly but it was almost that easy and credit scores were not as important as they are today. What has changed is that banks now take extra precautions to ensure borrowers’ financial viability and ability to repay the loan. There has never been a more thorough documentation process involved and for good reason.

Today, a borrower must show that they are responsible citizens that are worthy of paying back their debts. They must have a credit score of 620 or higher and income must be proven with at least 2 months’ pay stubs, two yeas of employment on record and 2 years of tax returns to corroborate the financials. Bank statements are also required as part of the process.

The bottom line is this: if you pay your bills on time, can prove a reasonable income level and a low enough debt-to-income ratio that supports the mortgage you are looking to obtain, chances are you will be approved. Making payments on time is critical as it is the primary source of information that lenders will review when they look at your credit report.

Many Loans Offer Low or No Down Payment

As far as the ease of being able to actually obtain the home, a lot of people are unsure of lenders’ down payment requirements these days. The truth is there are many programs out there that allow buyers to put only 3%, 5% or even NO money down. Depending on which program and financing options you select, there are benefits offered to military veterans, people seeking homes in certain areas in the outskirts of the city and also income-based low down payment programs as well.

One of the most popular financing options that many buyers choose is FHA financing which requires just 3.5% down on the purchase of a home. Since this option is not limited just to first-time buyers it is a great choice for many buyers.

Buyers Can Contribute to a Smoother Process

Some of the things that buyers can do to prepare in advance and to help the financing process go as smoothly as possible include preparing two years of tax returns, employment pay stubs and the two most recent months of bank statements. In addition, retirement statements, divorce decrees and rental histories showing responsible repayment habits.
Now is a great time to buy a home! Don’t let the rumors out there discourage you from starting the process. Lenders are lending. Right now homeowners are able to function in a home for far less than it would cost to rent each month. In fact, it often costs less to move into a home than it does to move into a rental unit, considering the first and last month’s rent and security deposit.

If you would like to explore your options, we invite you to contact us today! We look forward to making your real estate dreams become a reality.

Fast-Tracking Foreclosures Have Many Homeowners Jumping for a Short Sale Before It’s Too Late

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Are you behind on your mortgage payments? Does it seem that you have no way out and a foreclosure is inevitable? Well before you give up, consider a short sale. In fact, now may be the best time for you to sell your home as a short sale because of what may be soon to come. Banks are filing for foreclosure faster than ever before – and this comes at a time when many homeowners with underwater mortgages have become complacent, expecting more time.

Not only should you put your home on the market now as a short sale to avoid a foreclosure but also, making the move quickly could possibly save you thousands of dollars in taxes.

Right now, and through December 31, 2012 any forgiven debt may be discharged under the Mortgage Debt Forgiveness Relief Act. What this means is that any money you are discharged from paying back that would otherwise be considered as income by the IRS, is exempt from taxation through the program period. But as soon as January 1, 2013 rolls around, unless the program is extended, you would have to pay taxes on that “income”.

So if you are behind on your payments and it seems the bank is getting antsy, take this advice: consider short selling today.

We deal with many of these and would be happy to sit down with you to discuss your options. Contact us today!