Don’t Fear the Lender!

Don't Fear the Lender3 Changes that Make Qualifying for a Home Loan Easier

In recent months, lenders have made it easier for first-time buyers and other would-be buyers to quality for a home load. Sure that sounds great, but what does it mean?

Because these  changes loosened lending restrictions, more would-be home buyers can become homeowners in today’s real estate market, Keep reading if you have high debt-to-income ratio, educational loan debt or think you don’t have enough money for a decent down payment. The changes that lenders have implement can help you secure a part of the American dream this year.

#1 Debt-to-Income Ratio

If you haven’t applied for a home load for awhile, there are some changes that could positively affect your ability to secure mortgage dollars today. If you have debt-to-income ratio is quite high, don’t lose hope. Under new rules set by Fannie Mae and Freddie Mac, the investors behind most mortgages who set the guidelines for qualify for home loans, your monthly debt-to-income ration can now be as high as 50%. That means if all your deb including your mortgage payment, car loan, student loan, credit card debt and other debts take up half of our income, in many cases you can still qualify for a home loan.

#2 Student Debt

One change that affets a large number of mortgage applicants is that lenders are no longer required to calculate a student loan payment as 1% of the outstanding balance of the student loan, which in many cases, can b a high number.

Instead, lenders can now use theamount listed on the applicant’s credit report, which is typically a smaller number, especially in the case ofthose who are covered by the invcome-based, reduced-payment plans. This is a huge change for those with school debt.

Previously, if the total student loan amount was $50,000, lenders would add 1%, or in this case, $500, to the applicant’s monthly debt load, even if the applicant was paying a required amount of just $75 monthly. Lenders now use the actual amount being paid towards student debt and this method will help many more borrowers with student loans secure mortgage dollars.

#3 Down Payments

Home buyers will also find more lenders being flexible on down payment amounts. The standard 20% down payment is rare (and often unattainable) and many lenders allow 3% down with some options for even less. The better your credit score, the more likely you can qualify for a mortgage with a lower down payment.

Don’t Forget

Keep in mind that just because a lender approves you for a certain dollar amount for a home load,you don’t have to use all that money. In face, you know your financial situation best. If the proposed monthly mortgage payment seems to high for your comfort level, consider finding a home that costs less and requires a smaller mortgage.

All lenders are not created equally. Therefore before you go house hunting – hopefully with yours truly, Lucy Garber – it’s a good idea to talk to several lenders to find out what loan programs you can qualify for and then get pre-approved for a home load. The pre-approval will tell you exactly how much money a lender will give you for a home. With this information you’ll save time focusing only homes within you price range.

Republished from Lucy Garber’s RE/MAX Estate Properties/HomeActions, LLC newsletter Vol. 22, No. 6.

 

What Not to Do as a New Homeowner

New Homeowner Projects

You’ve finally settled into your new home.

You’re hanging pictures and pinning ideas for your favorite bath.

But in all your excitement, are you missing something? Now that you’re a bonafide homeowner are there things you should know that you don’t?

Probably so. Here are six mistakes new homeowners often make, and why they’re critically important to avoid.

#1 Not Knowing Where the Main Water Shutoff Valve Is

Water from a burst or broken plumbing pipe can spew dozens of gallons into your home’s interior in a matter of minutes, soaking everything in sight — including drywall, flooring, and valuables. In fact, water damage is one of the most common of all household insurance claims.

Quick-twitch reaction is needed to stave off a major bummer. Before disaster hits, find your water shutoff valve, which will be located where a water main enters your house. Make sure everyone knows where it’s located and how to close the valve. A little penetrating oil on the valve stem makes sure it’ll work when you need it to.

#2 Not Calling 811 Before Digging a Hole

Ah, spring! You’re so ready to dig into your new yard and plant bushes and build that fence. But don’t — not until you’ve dialed 811, the national dig-safely hotline. The hotline will contact all your local utilities who will then come to your property — often within a day — to mark the location of underground pipes, cables, and wires.

This free service keeps you safe and helps avoid costly repairs. In many states, calling 811 is the law, so you’ll also avoid fines.

#3 Not Checking the Slope of Foundation Soil

The ground around your foundation should slope away from your house at least 6 inches over 10 feet. Why? To make sure that water from rain and melting snow doesn’t soak the soil around your foundation walls, building up pressure that can cause leaks and crack your foundation, leading to mega-expensive repairs.

This kind of water damage doesn’t happen overnight — it’s accumulative — so the sooner you get after it, the better (and smarter) you’ll be. While you’re at it, make sure downspouts extend at least 5 feet away from your house.

#4 Not Knowing the Depth of Attic Insulation

This goes hand-in-hand with not knowing where your attic access is located, so let’s start there. Find the ceiling hatch, typically a square area framed with molding in a hallway or closet ceiling. Push the hatch cover straight up. Get a ladder and check out the depth of the insulation. If you can see the tops of joists, you definitely don’t have enough.

The recommended insulation for most attics is about R-38 or 10 to 14 inches deep, depending on the type of insulation you choose. BTW, is your hatch insulated, too? Use 4-inch-thick foam board glued to the top.

#5 Carelessly Drilling into Walls

Hanging shelves, closet systems, and artwork means drilling into your walls — but do you know what’s back there? Hidden inside your walls are plumbing pipes, ductwork, wires, and cables.

You can check for some stuff with a stud sensor — a $25 battery-operated tool that detects changes in density to sniff out studs, cables, and ducts.

But stud sensors aren’t foolproof. Protect yourself by drilling only 1¼ inches deep max — enough to clear drywall and plaster but not deep enough to reach most wires and pipes.

Household wiring runs horizontally from outlet to outlet about 8 inches to 2 feet from the floor, so that’s a no-drill zone. Stay clear of vertical locations above and below wall switches — wiring runs along studs to reach switches.

#6 Cutting Down a Tree

The risk isn’t worth it. Even small trees can fall awkwardly, damaging your house, property, or your neighbor’s property. In some locales, you have to obtain a permit first. Cutting down a tree is an art that’s best left to a professional tree service.

Plus, trees help preserve property values and provide shade that cuts energy bills. So think twice before going all Paul Bunyan.

Source: John Riha for  HouseLogic