13 Reasons You Should Buy a Home in the Richmond Area, Now!

Conventional wisdom says that this is an awful time to buy a new home. The housing market is in a funk. Mortgage companies have tightened their guidelines and homes are sitting on the market for months without selling. If you listen to the news it's all doom and gloom with talk of recession and inflation, and questions of how long it will be before we see a recovery. So who would be crazy enough to buy a home now?

There is a famous quote by noted investor Baron Von Rothschild - the time to buy is when there is blood in the streets. Here in Richmond the market isn't as bad as it is in other parts of the country, but if you are a seller sitting in a home that won't sell, the situation is grim. But the bad news for the seller is great news if you are looking to buy a home. Here are some reasons to buy a home here in the Richmond area, now:

Selection - There are homes in the market in all areas and all price ranges. With more houses on the market you can pick and choose and find the home you want. It wasn't so long ago that buyers were jumping on new listings as they came onto the market, even if the home wasn't exactly what they were looking for. You can pick and choose, now.

It's a buyer's market - Again, the best time to buy is when most people want to sell. If you buy now you can get a lot more house for your money, and you have a lot more negotiating power.

Interest rates are low - Mortgage interest rates are at their lowest point in the last several years. This means your mortgage payment takes you a lot farther than it did before. We're not that far off of the all time lows we hit several years back. It is smart to take advantage of the low mortgage rates while they are still available.

Great financing is available - There's a lot of talk about how the problems in the mortgage market have made it harder for borrowers to get financing. Some programs have been cut out, and guidelines are tougher than they were before. But there is still a lot of mortgage money available, including options for low or no money down, and some great programs for first time home buyers. If you are a first time home buyer in Richmond, you may qualify for Virginia Housing authority Program which offers a below market interest rate and down payment and closing costs assistance. There are other programs for home buyers in Virginia with great rates and low fees, ask me how?

Tax savings - Buying a home is one of the best ways to save money on taxes. Your mortgage interests, real estate taxes and in many cases mortgage insurance are all tax deductible. If you are a first time home buyer this means that after-tax, you can pay a lot more for a mortgage payment than you pay for rent.

Appreciation - This might not seem like the best reason to buy, with prices stagnating and falling in some areas, but in the long run, home prices always move up. There is a lot of pessimism in the real estate market today, but even the most pessimistic are bullish in the long run.

Equity build up - As you pay down your mortgage you build up equity in your home. Most people don't even think of this because it is so gradual, but every mortgage payment (as long as it is an amortizing loan) pays a little less interest and a little more principal. In a way owning a home is a form of forced savings.

Tax refunds are coming out - If you wanted to buy but were short of cash, your tax refund could be just what you need for the down payment and closing costs.

Rents are rising - Buying a home means you can fix your mortgage payment, at least the principal and interest portion. Rents are projected to rise this year and over time.

Those are the hard financial reasons for buying a home now, but there are other good reasons to buy now:

You need more room - Has your family has grown, and you are bursting at the seams? You need a new place to put all your stuff? If you have needs that you've been putting off, this could be the right time to buy and take advantage of the buyers market.

Control - If you own your home, you can do what you want to with it. Have a dog? Not a problem. Want to plant a garden? Go for it. Want to paint stripes on the walls? Paint your heart out, it's your home and you are in control.

Pride of ownership - There is a big difference between renting a place and having a home of your own.

It's the American Dream - Not only that, but buying a new home gives you a reason to throw a house warming party.

These are some reasons for buying now, but buying isn't the right course for everyone. Buying a home is a long-term investment. If you can't afford to hold on for the long run, you might be better off renting.

First Time Home Buyer: Part 6 of 8

All About Down Payments

An important aspect of getting a home loan is saving money for your down payment. You have many choices to make your home more affordable to you.

Lenders used to require a down payment of at least 20 percent of the home's price. These days, however, many lenders offer flexible home loan programs allowing you to put very little down -- three percent or less of the home price. For some buyers it's possible to buy a home with no down payment at all, or to receive help from local down payment assistance programs.

If you decide to pay make a down payment less than 20 percent, your lender may require Private Mortgage Insurance (PMI), which protects the lender in case you cannot repay the mortgage. Talk with your mortgage professional to find out the smartest deal for you.

You'll also need to pay for closing costs, which are costs associated with initiating a loan. These can include loan origination fees, discount points, attorney fees, recording fees and pre-paids. They often will total from three to five percent of the price of the home.

Once you have you down payment and loan pre-approval, it's simply a matter of finding the right house. Please call or email Mohamed Mekhimar when you're ready to take this next step towards owning your own home.

First Time Home Buyer: Part 4 of 8

The Importance of Pre-approval

Pre-approval can be a very valuable step towards purchasing a home. Many home buyers get pre-qualified for a home loan early on, and then become pre-approved before beginning a serious home search. By completing your mortgage application prior to choosing a home, you can get a pre-approval letter stating how much home you can afford.

Your pre-approval letter lets you know exactly how much you can spend, and it shows home sellers and real estate agents that you're serious about buying a home. This may give you leverage in the negotiation process. Many sellers actually prefer to work with pre-approved buyers, especially in hot real estate markets.

To find a mortgage professional and get started with your pre-approval for a loan, please call or email me. My goal is to provide you with practical information as you consider your next move.

Tips for Getting Pre-approved for a Mortgage!

In a competitive market, getting mortgage pre-approval is essential. It gives you a great bargaining tool when you're negotiating with sellers. Regardless of the market situation, pre-approval is also handy because it means that before you even start house-hunting, you've got a good idea of what you can afford.

Pre-approval versus Pre-qualification

Pre-qualification and pre-approval are similar processes. Having pre-qualification means that you have a general idea of how much mortgage you can afford, but it's not guaranteed that you will get that amount when you apply for the mortgage. Pre-approval takes the process a step further than pre-qualification, because the lender will verify your employment, income, assets, debts, and credit history, and you will receive a letter stating that your mortgage is approved for a certain amount of money, usually with a limit of between 30 and 90 days. That means you know exactly how much you have to spend, and sellers know that you're a serious customer.

Pre-approval has another advantage in that it saves you time when it comes to closing on a property - you've already been through about 90% of the mortgage application process. If you have pre-approval it means that all you need to finalize the mortgage is a purchase contract and a property appraisal. Being able to close quickly is an advantage in a competitive market, and in a slow one it may help you negotiate a great deal on a property.

Note that if you are pre-approved for a mortgage, you must notify your lender immediately if your financial circumstances change between pre-approval and closing, as your pre-approval may be invalidated.

Increase Your Chances of Pre-approval

Pay Your Debts
Any debt that you can't pay in full within six months will be included as part of your monthly debt total. And the higher your debt total, the lower the chances you have of getting pre-approved - if your monthly debt total exceeds about 36% of your gross monthly income, getting pre-approval may be difficult.

Don't Create New Debt
Your pre-approval is subject to an evaluation of your finances. If you're thinking about buying a home then it's a wise move to refrain from making any large credit purchases. It's estimated that every $100 a month you pay on a credit card reduces your home loan eligibility by $10,000.

Preparation
When you're preparing to apply for a mortgage pre-approval, there is a wide variety of supporting documentation you'll need to locate and have ready for the application process. This includes tax returns, pay stubs, evidence of any other income, bank statements, and debt payment booklets or account statements.

What to Do If You Have Bad Credit
When assessing your credit, mortgage lenders typically pad most attention to your FICO score. Some lenders won't even consider offering a mortgage to anyone with a FICO score of less than 680. So what do you do if your credit isn't that good?

Check your credit reports - obtain a copy of your FICO score and credit reports and check to make sure there are no errors.
If you can manage a larger down-payment, it may help your chances of getting pre-approved.
Sub-prime mortgage lenders offer mortgages for people with credit problems. They usually involve paying a higher interest rate, however it's possible to get a sub-prime mortgage and then refinance to a conventional loan with a lower interest rate after a couple of years of rebuilding credit.

Consequences for 'Walk-Away' Borrowers!

The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender.

Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.

Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.

Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven.

Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.

Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)

Mortgage rates Rise for Third Week in Row!

Freddie Mac reports a jump in the 30-year fixed mortgage rate to a more than three-month high of 6.24 percent during the week ended Feb. 28. The previous week rates stood at 6.04 percent. The jump marked the third consecutive weekly increase.

Interest on 15-year fixed-rate mortgages climbed to 5.72 percent from 5.64 percent over the same period. Meanwhile, the five-year adjustable mortgage rate edged up to 5.43 percent from 5.37 percent. The one-year ARM shot up to 5.11 percent from 4.98 percent.

Mortgage Rates Falling Hitting Four Year Low!

Mortgage interest rates for the week ended January 24 continued to fall and long term rates hit their lowest levels since the spring of 2004 according to the results of Freddie Mac's Primary Mortgage Market Survey for the week ended January 24, 2008.
Mortgage application volume increased 7.5 percent on a seasonally adjusted basis from a week earlier and 10.5 percent on an unadjusted basis.

For additional local real estate information, information about me and my services, to request home listings by E-Mail, to request a market analysis on your current home, or to tour the MLS Listings please visit my web sites at http://www.RichmondVAHomes4Sale.com or http://www.e-richmondhomes.com/.

Richmond Virginia Real Estate - First Time Home buyer

Thinking about purchasing a home of your own? Keep these critical considerations in mind:

How long you plan to live in the home?

If you purchase a home and get a job transfer or decide to move after only a short time, you may end up paying money in order to sell it. The value of your home may not have appreciated enough to cover the costs that you paid to buy the home and the costs that it would take you to sell your home.The length of time that it will take to cover those costs depends on various economic factors in the area of the home. Most parts of the country have an average of 3% or less appreciation per year. In this case, you should plan to stay in your home at least 3-4 years to cover buying and selling costs. If the area you buy your home in experiences an economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.

How long the home will meet your needs?

What features do you require in a home to satisfy your lifestyle now? Five years from now? Depending on how long you plan to stay in your home, you'll need to ensure that the home has the amenities that you'll need. For example, a two-bedroom dwelling may be perfect for a young couple with no children. However, if they start a family, they could quickly outgrow the space. Therefore, they should consider a home with room to grow. Could the basement be turned into a den and extra bedrooms? Could the attic be turned into a master suite? Having an idea of what you'll need will help you find a home that will satisfy you for years to come.

Your financial health - your credit and home affordability.

Is now the right time financially for you to buy a home? Would you rate your financial picture as healthy? Is your credit good? While you can always find a lender to lend you money, solid lenders are more skeptical if your credit history is not good. Generally, a couple of blemishes on a credit report will make you a good credit risk and could qualify you for the lowest interest rates. If you have more than a couple of blemishes on your report, lenders like Quicken Loans may still provide you with a loan, but you may just have to pay a higher interest rate and fees.

Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow. This is a decision only you can make. Are you in a position where you expect to make more money soon? Would you rather be conservative and fairly certain that you can make your payment without stretching financially? Make sure that whatever you do, it's within your comfort zone.

To determine how much home you can afford, talk to a lender or go online and use a "home affordability" calculator. Good calculators will give you a range of what you may qualify for. Then call a lender. While some may say that the "28/36" rule applies, in today's home mortgage market, lenders are making loans customized to a particular person's situation. The "28/36" rule means that your monthly housing costs can't exceed 28 percent of your income and your total debt load can't exceed 36 percent of your total monthly income. Depending on your assets, credit history, job potential and other factors, lenders can push the ratios up to 40-60% or higher. While we're not advocating you purchase a home utilizing the higher ratios, its important for you to know your options.

Where the money for the transaction will come from?

Typically homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.

The ongoing costs of home ownership.

Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a condominium, townhouse or in certain communities, a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs.

If you are still unsure if you should buy a home after making these considerations, you may want to consult with Realtor to help you with the process.

CONTACT ME for assistance with RICHMOND REAL ESTATE
Mohamed Mekhimar , Realtor®, Accredited Buyers Representative , RE/MAX Commonwealth, mekhimar@remax.net, (804) 243-0605 Cell, (804) 288-5000 Office, (804) 288-8989 Fax, http://www.richmondvahomes4sale.com/, Licensed in the Commonwealth of Virginia

Mortgage Tips for a Tight Lending Market!

Even home buyers with good credit may have trouble getting a mortgage these days.

Here are three tips for home buyers in search of the best deal.

* Conforming loans win. Keeping the loan below $417,000, the most that Freddie Mac and Fannie May will buy, saves big money since the rate on nonconforming loans is now a full point higher than for lesser loans. If getting the cash together is a challenge, Greg McBride, senior financial analyst with Bankrate.com, suggests taking out a small second mortgage or tapping an existing line of credit.

* Don’t rock the boat. "Anything that might disrupt your credit history will be seen with a more jaundiced eye," says Keith Gumbinger, a vice president with mortgage research firm HSH Associates. He says avoid big credit card purchases or, if possible, major life changes.

* Get multiple approvals. McBride urges borrowers to get advance approval from more than one lender, just in case the lender – not the borrower – goes under.

Source: Smart Money, Brad Reagan (11/1/07)

Harder for self-employed borrowers to qualify for mortgage!

It is growing increasingly difficult for the self-employed to get a mortgage. Some lenders that specialized in home loans to self-employed workers and small-business owners have gone out of business. And many lenders that still offer such loans have tightened their standards, making it harder for self-employed borrowers to qualify.Here's what self-employed borrowers need in order to qualify for a mortgage in this new environment, according to Marc Savitt, president of the National Association of Mortgage Brokers.

• More documentation. Along with two years of tax returns, self-employed borrowers might be asked to provide a profit-and-loss statement, bank statements, and proof that they've been in business for at least two years. A letter from their accountant probably won’t be good enough.
  
• Fewer tax deductions. Savitt says self-employed workers who plan to buy a home in the next year or two might want to forgo some deductions. "Make sure you can show as much income as possible," he says.
  
• Larger down payments. An old-fashioned 20 percent down is very persuasive.
  
• Excellent credit. A credit score of 720 or higher will give self-employed borrowers some choices.
  
• Patience. Even for well-off business owners, qualifying for a mortgage is "not that smooth, easy no-brainer like it used to be," Savitt says. "If you want it to be quick, you're paying a higher price.

"Source: USA Today, Sandra Block (10/02/07)

Six Reasons To Avoid Private Mortgage Insurance!

If you're thinking of buying a home, remember you're going to need to save up enough money for a 20% down payment. If you can't, it's a safe bet that your lender will force you to secure private mortgage insurance (PMI) prior to signing off on the loan. The purpose of the insurance is to protect the mortgage company if you default on the note. Some lender they over come (PMI) by offering two loans (80% and 20%).
(Source: Forbes.com) Full Story . . .

Mortgage rates rise a small amount!

The benchmark 30-year fixed-rate mortgage rose 4 basis points, to 6.78%, according to a national survey of large lenders. The mortgages in this week's survey had an average total of 0.29 discount and origination points. (Source: Bankrate.com) Full Story . . .

Foreclosures dip, but that wont last!

Home foreclosures fell in June after jumping to a 30-month peak in May, but default rates will escalate as a horde of mortgages reset at higher loan rates, according to real estate data firm RealtyTrac. (Source: CNNMoney.com) Full Story . . .

Home Buying!

Buying a home can be stressful, but it doesn't have to be! I’ll work hard to make your experience exciting and fun. While we are working together I’ll be like your new best friend! I promise to help you: Save time, Money, and Stay Informed.

Here is the step by step guide. But please don't feel like you need to understand everything right away. And I will be there for you every step of the way.

1. Decide that buying vs. renting is best for you.
2. Determine how much you can afford.
3. Get Pre-Approved, Shop for a loan
4. Review a preliminary MLS list.
5. Find your dream home.
6. Making the offer.
7. Negotiate the contract.
8. Changes to the contract.
9. Formally apply for a mortage loan.
10. Inspection phase.
11. Inspection issues and resolution.
12. Appraisal & Insurance.
13. Loan commitment.
14. Preparing for the move.
15. The closing.
16. Possession.
17. Post closing.

Remember, I will be there to support you during these very important steps! If you have a comment or question regarding these buying steps, please feel free to call or e-mail me.

Fixed Mortgage Rates Moving Higher!

According to a weekly national survey of large lenders, the average 30-year fixed mortgage rate rose 6.22 percent following the Fed's concerns about inflation. Read more...