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Fannie Mae Profits 2nd Quarter


One of the main factors to determine how the real estate market is doing is to actually look at the books of a company such as Fannie Mae. Just posted on Wednesday, August 8th, Fannie Mae recorded a $5.1 billion profit during the months of April through June. This is a big sign as the company will not need any more bailout money this past quarter.

Fannie Mae received a huge bailout back in 2008 due to being near bankruptcy. This is a good sign that the company is bouncing back as well as the real estate market.

As of the end of the second quarter, Fannie Mae has profited $7.8 billion the first half of 2012. The reason behind the company’s successful quarter is due to “improved home prices, improved sales prices on the company’s real-estate owned properties, and a decline in the single-family serious delinquency rate”, according to executive vice president and chief financial officer, Susan McFarland.

According to Fannie Mae’s press release, single-family serious delinquencies have declined for the ninth consecutive quarter.

Fannie Mae is using these profits to pay back its debts to the Department of Treasury. Fannie Mae has stated to be paying out $2.9 billion to the Department of Treasury for their second quarter dividends.

No one is going to declare a housing recovery as of yet, but it is encouraging when the signs show improvement.

Here is a chart provided my Fannie Mae regarding the withdraws from the Department of Treasury as well as the pay backs between 2008 to 2012.

 

 

 

4 Tips That Can Save You Thousands


We provide monthly newsletters to our clients who are either shopping for a home or wanting to buy relatively soon. This article, written by Randy Glasbergen (2006) talks about 4 tips that can save you thousand when wanting to buy a home.

1. Don’t Get Pre-Qualified.

Get pre-approved.

Do you want to get the best house you can for the least amount of money?  Then make sure you’re in the strongest negotiating position possible.  Price is only one bargaining chip in the negotiations, and not necessarily the most important one.

Often other terms, such as the strength of the buyer or the length of escrow, are critical to a seller.  This process takes anywhere from a few days to a few weeks depending on your situation.  It’s VERY POWERFUL and a weapon we recommend all of our clients have in their negotiating arsenal.

2.  Sell First, Then Buy.

If you have a house to sell, sell it before selecting a house to buy!

Let’s pretend that we go out looking for the perfect house for you.  We find it and

you love it!  Now you have to make an offer to the seller.  You want the seller to reduce the price and wait until you sell your house.

The seller figures that’s a risky deal, since he might pass up a buyer who DOESN’T have to sell a house while he’s waiting for you.

So he says OK, he’ll do the contingency but it has to be a full-price offer.  So you see, you paid more for the house than you could have because of the contingency.  Now you have to sell your existing house, and in a hurry, otherwise you lose the dream house.  So, to sell quickly you might take an offer that’s lower than if you had more time.

3. Play the Game of Nines.

Before house hunting, make a list of nine things you want in the new place.  Then make a list of the nine things you don’t want.  We call this Nine of This and None of That.

You can use this list as a scorecard to rate each property you see.  The one with the biggest score wins!  This helps avoid confusion and keeps things in perspective when you’re comparing dozens of homes.

When house hunting, keep in mind the difference between skin and bones.  The bones are things that cannot be changed such as the location, view, size of lot, noise in the area, school district, and floor plan.  The skin represents easily changed surface finishes like carpet, wallpaper, color, and window coverings.  Buy the house with good bones, because the skin can always be changed to match your tastes.  I always recommend that you imagine each house as if it were vacant.  Consider each house on its underlying merits, not the seller’s decorating skills.

4.  Don’t Be Pushed Into Any House.

Your agent should show you everything available that meets your requirements.  Don’t make a decision on a house until you feel that you’ve seen enough to pick the best one.  Review the Multiple Listing printout with your agent to make sure that you are getting a COMPLETE list.

In the late 1980s, homes were selling quickly, usually a few days after listing.  In that kind of market, agents advised their clients to make an offer ON THE SPOT if they liked the house.  That was good advice at the time.  Today there isn’t always this urgency, unless a home is drastically under-priced, and you’ll know if it is.

 

Tips on Buying a Good Home


1. Buy a Home You Can Afford

Make sure when choosing a home that you are comfortable with the mortgage payment. You do not want to purchase a home in a price range that will leave you scrounging for money each month just to make the payment. You need to keep in mind the other payments you still have obligations towards, such as a car payment, student loans and other expenses that add up.

A certified mortgage planning specialist analyzes your debts and will inform you on what a reasonable and realistic house payment is based on your scenario.

2. Make Sure You Can Stay Put

You don’t buy a home with the intention of moving right away. You should only purchase if you are planning on staying put for a few years. A home is an investment. If you are not able to make the commitment of staying in the home for a few years, then you may want to reconsider purchasing at that moment.

3. Get Pre-approved Before Looking

Without a pre-approval from a mortgage broker, you really are not in any position to look at homes. A pre-approval secures the fact that based on your income, assets, debts that you will qualify for a specific price range of homes. You should always seek a pre-approval from a lender to ensure you are not wasting your time, or a realtor’s time in looking for a home.

4. Know Your Credit

If you have issues on your credit report, you want to start getting those fixed before trying to buy a home. You need to also make sure you are current on all credit line payments and not maxing out your credit lines. Also, when you are in the middle of purchasing a home, DO NOT open new lines of credit. You do not want to open any new lines of credit, because that can affect your ability to purchase a home.

5. Do Your Homework

More often than not, homebuyers fall in love with a neighborhood but haven’t done their homework. You need to find more information about the taxes for that area as well as if there is an HOA (Home Owner’s Association) fee. These two things can really increase your monthly payment and you need to be aware of the full cost of the home. You not only have the mortgage payment, but you will also have to pay taxes, insurance and possibly an HOA fee.

A certified mortgage specialist has access to this information for any home on the market. Ask them to research a home in that area to find out what exactly you will be paying.

 6. Choose an Area With A Good School District

If you are just purchasing a home and have small children, or planning on having children, you want to make sure you choose an area that has a good school district. Since a home is an investment, you should only purchase if you are planning on staying a while. You will want a good school district, so do some research on the area before purchasing.

7. Start Saving Your Down Payment

Depending on what loan program you are able to purchase under, you will need to bring in a different down payment. Majority of homebuyers tend to put down anywhere between 3.5 percent to 20 percent of the home price. Start saving the down payment so when it’s time to make an offer on a home, you have the strength of a solid down payment.

8. Work With Respected Professionals

Buying a home is not a simple process, so you need to make sure you are working with the best people to help you through the process. This should be a fun and exciting time, but there will be some stressful moments. Do your research, read reviews, and choose a mortgage professional that knows what they are doing, and has the history to prove it. If you don’t have a real estate agent, your mortgage broker will more often than not guide you to a great real estate agent that will meet your needs.

5 Mistakes to Avoid When Buying a Home


Here are 5 mistakes that are commonly made by homebuyers, but can easily be avoided.

Mistake #1

Not knowing how much you can afford to pay for a home before you make an offer.

You can avoid this mistake by going through the process of getting pre-qualified and then pre-approved with a mortgage lender. You will then receive a certificate of eligibility to go house shopping and make offers with your realtor.

(Get pre-qualified today)

Mistake #2

Not finding out in advance who the real estate agent represents.

This mistake can be avoided by….Asking your realtor! People think their agent is working for them, but unless the agent is working as your buyer representative, then he or she are representing the seller.

Mistake #3

Not realizing that the wrong mortgage can cost thousands of dollars in unnecessary interest and taxes.

This mistake can be avoiding through consulting with a mortgage consultant before making a final decision on which mortgage to choose. You can never ask too many questions in the home buying process.

Mistake #4

Not looking for hidden defects before buying a home.

A home inspection should always be conducted by a professional before purchasing.

Mistake #5

Not knowing how your debt can affect your ability to buy or refinance a home. Be 100 percent honest about your debts when buying a home. You need a good credit profile in order to purchase a home, so start working on it a year in advance of when you want to buy. Speak with a mortgage professional to help give you guidance and improve your credit.

Also, on a side note, if you are in the process of buying a home, DO NOT add any new debts to your credit! Don’t open credit cards, don’t buy a car, don’t do anything until your transaction has closed and you have the keys in your hand.

Have a question about buying a home? Click here

7 homebuying tips you need to know


As a new homebuyer, or even an experienced buyer, it is easy to stress over every detail when trying to find the home of your dreams. Rather than stressing over every detail, here are 7 homebuying tips that deserve extra attention.

1. Get preapproved for a loan. Getting pre-approved is much different than pre-qualified for a home loan.  With a pre-approval letter, you can engage in the home buying process with confidence because you have been given the approval to purchase a home for a certain qualifying amount. You should never engage in the home buying process unless you have this certificate of a pre-approval.

2. Partner with the right agent. Make sure you are working with an agent that you trust. Referrals from family, friends, and neighbors is a great way to meet an agent. It is highly recommended that you work with someone in your area so that they are familiar with area you would like to live. Also, make sure your agent is able to communicate with you in your preferred manner whether that is text, phone, email, or in person.

3. Don’t look at too many homes. The home buying process can easily become overwhelming. When you are given more options (just like a buffet) it makes it harder to make a decision. Make sure you are making a list of non-negotiables in a home and separating that from your list of “wants” and “wishes”. The non –negotiables will help be a determining factor in deciding if a home is meant for you or not. It’s not recommended that you look at every single house as possible because you should be narrowing your search, not broadening it.

4. Keep an open mind. It’s a lot harder to find the home of your dreams if you are closed minded to one specific style home. Make it easier for your agent to offer suggestions by keeping an open mind. Often times, you may see features and amenities you love in a different style home, but without an open mind you may never stumble across it.

5. Visit the neighborhood. One of the best things to do before choosing a home is visiting the neighborhood on a weekend to see what the neighborhood is like. You can see if kids play outside, how the neighbors interact, etc. Also, visiting the local grocery store can help give you an idea of who lives in the neighborhood. We even suggest being bold and talking to a few shoppers to get their opinion.

6. Submit your highest and best offer up front. When making an offer on a prime house, it is probably safe to say many other offers are rolling in as well. You don’t want to be outrageous with your offer, but you want to submit a realistic offer that is in your means, and also competitive. You would hate to miss out on a home because you didn’t offer the most you could for a home you want. It is also suggested that you submit your offer with comparable sales for support.

7. Be prepared to compromise. Don’t lose the opportunity of buying the home of your dreams over small things that can easily be compromised. It is not realistic to expect the seller to want to upgrade your carpet, counters and other features of the home that aren’t necessary. Don’t let those small details deter you from a home. The key features of a home that can’t be compromised are the layout, the size, and location.

9 Tips to Help You Save For a Down Payment!


Wondering how you are going to afford a down payment for a home? This is a common concern for homebuyers, but we want to provide you with 9 tips to help you save for a down payment. You’ll be able to buy the home of your dreams much sooner.

1. Save

This seems obvious, but the second you start thinking of wanting to buy a home, why not start setting aside money on a monthly or weekly basis. You will see how quickly it adds up. You can enroll for an automatic savings plan with your bank or have a portion of your paycheck get automatically transferred to you savings.

2. Borrow the down payment from your retirement plan

Check the provisions of your retirement plan. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms and/or possible early withdrawal penalties.

3. Move

Obviously this option is only available for people who already live in a home. By selling your home you may be able to save additional funds if you can move into a less expensive house.

4. Reduce other higher interest rate debt

Debt is stressful, so if you are capable of paying off credit cards with high interest you will be able to start saving. Yes, at first your savings will take a hit and reduce, but the money you will save from higher interest rates will pay-off in the long run. Trust me!

5. Make a deal with the seller

You would be surprised but in some circumstances it is appropriate to ask the seller to carry a second-mortgage to cover your down payment. Typically, you will pay a slightly higher rate for this second mortgage.

6. Sell some investments

7. Get a second job and save your earning

You’ll be putting in extra work but it will be worth it in the end! Focus on your long term goal and understand it’s temporary.

8. Skip a year’s vacation

I know, I know… this seems awful, but try doing a local vacation that does not cost as much money. Also, keep in mind it’s only one year you are giving up a vacation. However, that will put you closer towards achieving your future goal of a new home (where you will make many more memories).

9. Gift from family

Parents and other family members are often anxious to help children buy their first home and may have the means to give you a gift of money for a portion or all of your down payment.

For other down payment tips you can visit our website.

FHA Loan Limits Restored


Last Friday, November 18, 2011, President Obama signed a bill that restored the loan limits for FHA (Federal Housing Administration) mortgages. For homeowners in the Inland Empire area (Riverside and San Bernardino counties) the loan limits went from $355,350 back up to $500,000.

However, this bill only increased FHA loans, and did not include Fannie Mae or Freddie Mac. Currently, Fannie Mae and Freddie Mac loan limits are at $417,000. Keep in mind, President Obama did pass a new refinance program for Fannie Mae and Freddie Mac that will benefit underwater mortgages.

With the loan limits being restored to $500,000 until December 31, 2013, we can expect more home sales within the next two years. Overall the FHA loan limit increase will benefit future homeowners.

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