3 common mistakes that home buyers make

Have you been looking for a home in the San Fernando Valley or Los Angeles? Have you been disappointed with the kinds of homes that you have seen? Have you made offers, only to lose them out in multiple bidding situations? Here are three tips to help you.

Be realistic about your finances and what you can afford. Home prices have rebounded from the recession.  They have risen, too, since you first began considering making a purchase. Home inventory is really low as well which results in more buyers chasing the same few homes. If you find yourself in a multiple offer situation, price is going to matter to your seller much more than your good looks. If you love a home, but will be really stretched to afford it, or if you do not have a decent down payment for the home price range that you are looking in, you may want to wait awhile and save up more money.

Before you begin home shopping, get pre-approved for a mortgage loan by a local lender. I've said this before. Now is the time to shop for a lender and rates, not on a Sunday night after you have visited the open house of your dreams. This is important because most sellers and listing agents will look at your financial qualifications before they review your home offer. Your lender will be able to look at your financial profile and determine how much you can comfortably pay. A good lender can also coach you regarding cleaning up credit, straightening out financial issues, and qualifying for the best loan programs.

Write good offers. A home purchase offer contains much more than just the price, and your Realtor will be able to advise you on how to make your offer stand out. Put down a decent deposit. Find out in advance what your sellers' moving dates are and try to accommodate them. Shorten your contingency periods if you can. Think twice about asking the seller to pay for any of your closing costs. Yes, a letter explaining who you are and why you like the house will usually be helpful, too. Make sure to include a picture of your kids and pets.

Hopefully, you will now be better prepared to get the house you want. Happy house hunting -- your perfect home really IS out there.

Ask me anything! How much of a mortgage interest deduction can I actually expect? What will I save in taxes?

How much of a tax savings will you get when you finance your new home through a home loan? Only your tax preparer can tell you exactly what deductions you can take and what tax savings you'll receive, but here's a good rule of thumb: for every three dollars that you pay in interest on your mortgage loan, you'll get back one dollar in taxes.  One of three.  But again, only your tax preparer can give you the true amount.

The Realtor buys a home, chapter 2

We are getting a full-documentation loan. Gathering all the financial documentation to give to the lender is a big pain in the neck.  Necessary, but not fun, especially when your records are in different places all over your house.  How do you buyers do it?

Getting a home loan ain't what it used to be...

The owner of our company, Michael Williamson, is buying a Studio City home to live in.  He talked with our office this a.m. on his challenges in getting a home loan.  Mind you, he has gotten home loans 16 times before and says, "I thought I knew everything." Of course, he's putting down a lot of cash and has a very high FICO score too.

But getting a loan ain't as easy as it used to be, says Michael.  It took him an extra 16 days to get loan approval.  The lender kept asking for one piece of paper after another, and one explanation letter after another.  This even involved asking about ONE missed payment from a tenant on a property he owns in Palm Springs!  And this guy is way more qualified than most buyers.

So if you're a home buyer, and your lender asks you for something that doesn't make sense, don't get frustrated, just provide what you can as quickly as you can.  And if you're a home seller, please know that the lender doesn't particularly care about our contractual deadlines and go easy on your home buyers if loan stuff is late -- it truly is out of their hands.

Mamas, don't let your babies grow up to get home loans through BofA

Bank of America and Countrywide are bringing their "c" game these days. While they agressively market their purchase money lending services, they apparently can't deliver on what they're promising. We're hearing many stories -- more each day -- about their loans crashing and burning and/or taking forever to fund -- up to 70 days.

This doesn't surprise me as my own refinance took five months to go through.

Money to lend

Well, even though it was supposed to be raining fire and brimstone by now, several lending institutions are still making mortgage loans. Bank of America is not only making loans, they're still making home equity line of credit loans. And Metrocities, a big non-bank lender, still has plenty of money to lend, especially on conforming loans and junior jumbo loans (up to $729k). Hmmm.

Short Sale, Lending and PMI News

Here's some more good news from the lending sector:

Fannie Mae scraps higher downpayment requirements
Friday May 16, 9:54 AM EDT
WASHINGTON (AP) — Fannie Mae says it is doing away with higher minimum downpayment requirements for borrowers in distressed real estate markets.
The government-sponsored mortgage financier said Friday it will require minimum downpayments of between 3 percent and 5 percent for all loans that it guarantees.
That replaces a December policy that required a higher minimum if the loan was for a home in a market with declining real estate prices.
Washington-based Fannie says the move is part of its effort to help resuscitate the flagging mortgage market. Thanks, Dana Dukelow, for the article.

Other lenders are doing the same; however, it appears that the market for second mortgages is shrinking. For the average buyer, this is a mixed blessing: once again, you can get a home with only 5% or 10% down. That's the good news. The bad news is that rather than have two loans (say, one for 80% and one for 10%), a buyer will now have just one loan, but will pay "private mortgage insurance" every month.

In short sale news, it appears that the lenders are finally streamlining the process and it isn't taking so long to get an approval on a purchase contract. Also, in short sale cases where there is both a first and second loan, the holders of the 2nd loan are pretty much giving up and going away for a pittance (about $1000). No wonder the lenders of 2nd loans are dwindling!