Credit Reporting Kiss and Tell

In our office we have an in house lender who shares trends on our change by the hour mortgage industry. Recently she mentioned how quickly news can get out about you applying for a mortgage and how it can end up costing you in the end if you act casually. I thought I’d share.

The story was regarding a client that she had who applied for a loan and was approved to buy a home. The buyers credit score was above 700 and was good to go. The buyer’s agent advised the buyer to shop around to have his buyer get the best rate. The buyer did shop around but ultimately allowed much time to pass by.  After analyzing the loan offers, the buyer found that the original approval had the best offer. Meanwhile,  the credit bureaus notified collections agencies that the buyer had applied for new credit, collections then reactivated claims to the agencies, and their credit scored plummeted to the 660’s. The buyer was then faced with a higher second lien rate which was originally at 7.5% to a disheartening 9.5% by the time he was in a contract to buy a home.

The impact could mean the difference between buying now or having to rent longer if the buyers credit was marginal.

This was a case that the buyer did take a long period of time. Typically if a buyer acts timely this may not be a factor.

The advice?

First and foremost monitor you credit and check your credit 6 months ahead of your plan to purchase.  There are a lot of changes and knowing where you stand ahead of time can make secure your stake in being able to buy or not. Here you can also make sure that those old collection demons can be taken care of once and for all.

If you are approved comparison shop for a lender quickly and do not let your credit report expire. If you do let the report expire, you could end up seeing a dip in your score and it could be the difference in rate or being able to buy. You have about 90 days to get a loan and buy a house until your report expires. Use that time wisely.

So if you are able to get a loan initially, remember the credit bureaus will and do kiss and tell. Act!

For more information regarding your credit simply e mail me or call me at 512-744-4553.

Christopher

RE/MAX Capital City

Buying HUD Foreclosures in Austin Texas

Many of you have been seeking assistance for properties and asking me questions regarding buying foreclosures since my last entry on buying REO foreclosures in Austin. Some of the questions addressed HUD foreclosures which are very different from buying bank owned properties. These are great property opportunities for both prospective home buyer and investors as well. Here is a brief back ground on HUD Foreclosures in Austin.

HUD foreclosures are defaulted FHA loans which have been foreclosed. This happens because HUD oversees the Federal Housing Administration which provides federal insurance against default on mortgages. If a mortgagor defaults, FHA files a claim against the amount owed and title is conveyed back to The U.S. Department of Housing Urban Development making it HUD owned.

HUD foreclosures can be found within normal MLS listings.  If you find a property that interests you, you have to have a certified HUD broker assist you in order to show properties and place bids on your behalf. You can not bid on properties on your own. The process of buying HUD homes is very intricate and extremely time sensitive. I will only touch on a few points here.

The way you purchase a HUD home is by way of bidding. Similar to auction bidding, the highest overall bid wins including commissions, closing costs, or any other costs involved. Once you find a home you can find a report done by the M&M which is a Marketing and Management Contractor who performs an inspection for HUD and maintains the home during the listing process. You can not bid unless you have a pre-approval letter as is pretty much standard as with all properties now days. In the event of a highest bid all paperwork must be sent in to the regional office within 48 hours c/o your HUD broker representative. Fortunately the regional is here in Austin so there is ever so slightly more time. You do have normal inspection times and once the contract is signed expect 45 day or so for closing.

What You Need to Know

• I think the first thing you need to know is that similar to an REO, you are better off understanding the move in costs. Missing appliance(s) or cosmetic work generally is needed, such as carpet, paint, and minor repairs. Every house will vary.
• You may not win the bid. If you have ever competed for an item, on eBay, you will find that is some cases you will lose. This is also a possibility here as well. Pricing is key. Understanding strong offers is key for success.
• If you are an investor, in my experience it seems that owner occupants are favored more. Even if you come up with a better bid, sometimes it will not be acknowledged and you may lose out.
• Dealing with the government can be trying. The time lines and details to the paperwork are tedious yet necessary. Even so much as not providing a date after your signature during the offer phase can reject your offer. This can frustrate buyer/investors, but if it is done right the first time, there should be no worries.
• There are different bidding periods and time lines when dealing with a HUD home. Be sure to understand the different periods and acknowledgment time frames.
• These properties are truly “as -is” and there is no exceptions.

These are just a couple of aspects when dealing with HUD homes. Similar to REO foreclosures, there is great value in successfully buying a HUD home, more so IMO than REO because it seems that there is more room for negotiations in price.

For more information or some examples of great HUD properties simply e mail me and I will send you a current list of properties on the market.

Christopher

RE/MAX Capital City

FHA Loans Limits Increased Again for Austin- March

Still looking for solutions to both the lagging national home market, the sub prime mortgage hangover, and economy fears, the government backed FHA loan program gets a beneficial boost yet again for third time in several months to an unprecedented high of $288,750 for single family homes and $369,650 for 2 family homes which will undoubtedly benefit Austin. FHA loans, which to some lenders and Realtors was a hassle in the past due to its strict guidelines for properties and heavy paperwork for consumers in order to qualify, will be the go to program once again since many conventional loan programs are a thing of the past especially to the credit challenged.

While credit score is still the measuring stick in obtaining loans, there are other methods involving FHA available such as manual underwriting for those whose score is numerically challenged. Manual underwriting simply requires that you have one year of clean history, meaning no late rent payments, on time utilities, no judgments against you and a debt to income ratio up to 41% to name a few criteria.

The biggest news is that the increase will benefit both the Austin Buyer and Seller. Sellers whose homes are listed above the previous limit of $218,595 will have another avenue for prospective buyers to be able to purchase their home. There are still some requirements in order for homes to qualify for financing through FHA.

As of this second on the MLS the increase in loan amount potentially opens up more than 250 homes to buyers from the previous limit of $218,595 to the new limit of $288,750 for buyers. Condos, lofts, and townhomes saw an increase of 135 more homes potentially available to choose from. Of course as I mentioned before those properties must meet specific FHA guidelines in order to meet financing requirements, however the increase is a sign of greater choice for prospective buyers.

I can’t begin to say how great an opportunity for Real Estate in Austin this is. It seems that Austin, never apart of the national housing bust, seems to keep benefiting from these announcements. This along with the constant migration of people into Austin stands to see our market continue to out pace the nation and keep it ever desirable.

For more information, feel free to email me or call me directly at 512-744-4553 to get started in buying or selling your next home.

Christopher

RE/MAX Capital City