A survey by Ipsos found that the American public is still somewhat confused about what is actually necessary to qualify for a home mortgage loan in today’s housing market. The study pointed out two major misconceptions that we want to address today.
1. Down Payment
The survey revealed that consumers overestimate the down payment funds needed to qualify for a home loan. According to the report, 36% think a 20% down payment is always required. In actuality, there are many loans written with a down payment of 3% or less.
Many renters may actually be able to enter the housing market sooner than they ever imagined with new programs that have emerged allowing less cash out of pocket.
2. FICO Scores
The survey also reported that two-thirds of the respondents believe they need a very good credit score to buy a home, with 45 percent thinking a “good credit score” is over 780. In actuality, the average FICO scores of approved conventional and FHA mortgages are much lower.
The average conventional loan closed in March had a credit score of 753, while FHA mortgages closed with a 685 score. The average across all loans closed in March was 722. The graph below shows how the average FICO Score required has come down over the last 12 months and has stayed around 722 for the last six months.
Bottom Line info
If you are a prospective buyer who is ‘ready’ and ‘willing’ to act now, but are not sure if you are ‘able’ to, sit down with a professional who can help you understand your true options. Contact us today. 910-279-9398.
Posts Tagged ‘Buyers Agents Southport NC’
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank. With escalating prices, the second sale might be even more difficult than the first.
A recent post on “The Home Story”, a site published by Fannie Mae, explained the difference between the price a seller may get for their home and the value an appraiser might assign the property.
The Sales Price
Of course, most sellers want to maximize the value they get for the house. However, the price they set might not be reflective of the other comparable homes in the neighborhood. As the article stated:
“People tend to view their homes emotionally, and that can become quickly apparent when they decide to sell.”
That doesn’t mean that the home won’t necessarily sell for that price.
A seller can set an asking price and actually have a buyer agree to that price. However, that value may not be necessarily in agreement with what most buyers are willing to pay. For example, one person can view a property, determine it is exactly what they are looking for and well worth the asking price, whereas another person could look at the same property and feel the asking price is too high.
Steven Corbin, Director of Valuation in Fannie Mae’s CPM Real Estate division gives an example:
“Someone may have driven by the property countless times, and they really want to live in that house. So in reality they may overbid for that property. This would be a situation where the actions of a specific buyer do not represent the actions of a typical buyer.”
The Appraised Value (or Market Value)
Fannie Mae explains what they look for when appraising the house:
“When a contract is established on a property, an appraised value is determined by a professional real estate appraiser. The appraiser works on the lender’s behalf to determine that value by taking many factors into consideration, including the neighborhood, the value of properties of similar size and construction, and even such things as the type of fixtures on the premises and layout of the floor plan.”
“From a lending perspective, a bank would want to know the probable price a typical buyer would offer for the property. That’s what an appraiser would set as the market value.”
The Challenge when Sales Price and Appraisal Value are Different
If the appraiser comes in with a value that is below the agreed upon sales price, the lending institution might not authorize the mortgage for the full amount a buyer would need to complete the transaction.
Quicken Loans actually releases a Home Price Perception Index (HPPI) that quantifies the difference between what sellers and appraisers believe regarding value. The HPPI represents the difference between appraisers’ and homeowners’ opinions of home values.
Currently, there is approximately a 2% difference between what homeowners believe their home to be worth and what appraisers value that same home. On a $300,000 sale that would be a $6,000 difference. That could be a challenge that might prevent the home sale proceeding to the closing table.
Quicken Loans Chief Economist Bob Walters recently commented on this issue:
“The more homeowners are in line with appraisers, the easier it will be to refinance their mortgage and easier for those looking to buy a home. If the two are aligned, it eliminates one of the top stumbling blocks in the mortgage process.”
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). In a housing market where supply is very low and demand is very high, home values increase rapidly. One major challenge in such a market is the bank appraisal. If prices are jumping, it is difficult for appraisers to find adequate comparable sales (similar houses in the neighborhood that closed recently) to defend the price when performing the appraisal for the bank.
With escalating prices, the second sale might be even more difficult than the first. That is why we suggest that you use an experienced real estate professional to help set your listing price.
Let us help you determine your asking or buying price by contacting us at Coastal Realty Connections.
Source: Reposted from Current Affairs.
Although National Home Improvement Month is just around the corner. May is fast approaching. Want to get a jump start? The National Association of the Remodeling Industry (NARI) advises homeowners of the 10 most important steps to take before the remodeling project starts.
“The planning and researching phases of a project are the most critical steps in the remodeling process,” says Judy Moze, CR, GCP, NARI National president and president of Handcrafted Homes, Inc. in Roswell, Georgia. “The more knowledgeable and prepared a homeowner is, the more they protect themselves.”
What can a homeowner do to prepare for a remodel? NARI provides a top 10 list of steps homeowners should take before breaking ground on their next remodel.
1. Research your project. Taking time to research projects on the Internet andwill provide a good sense of what is involved such as price, scope of work, return on investment and new product/material options. Also, research property values in your neighborhood to make sure your project is in line with other homes in the area.
2. Plan project around the long-term. How long do you plan to stay in your home? How might your family structure change over time? Life can change quickly—these questions should be answered early on to ensure your project will fit your lifestyle long after it’s complete.
3. Set your budget. Deciding on a realistic budget and arranging finances to support your project are essential. This number needs to include everything—the project, products, contingencies, etc. Don’t be afraid to share this with your remodeler; professionals are respectful of a client’s budget and will create a plan around it, not over it.
4. Use advanced search for professionals. The online world makes it easy to gather information about strangers. Ask friends, family and neighbors for referrals and then spend time researching that person online. Professional remodelers take their reputation seriously and hold credentials beyond licensing, such as certifications, memberships in trade associations and additional training. Look for examples of press coverage or involvement in industry presentations or events. Check online reviews and social media to see how they interact with past clients and peers.
5. Ask the right questions. Time and cost are important, but getting the right information requires the right questions. Ask your professional remodeler about his educational background, training, specialties or past issues with clients. Ask about how the remodeling process will work.
6. Verify your remodeler. Don’t take their word for it. Check the information given to you such as references, license numbers, insurance information and certifications by calling providers to verify. Request a visit to an active client’s job site. Make it known that you are checking on him—a true professional considers that as a positive sign to working with a homeowner.
7. Review contracts word-by-word. A remodeling contract protects you and your remodeler. Homeowners should review this carefully. Professional remodelers have done this before, and know what should go in a contract. Homeowners are not as familiar with remodeling and should ask about terms if they don’t understand. Pay attention to details about change orders, payment, additional fees, timeline and responsibilities. If it’s not in the contract, it doesn’t exist.
8. Keep design in mind. Your design guides the entire project. Think about what you dislike about your current space and the intended use of the new space. Use Websites such as Houzz.com to gather design ideas. Make sure you can articulate specifically what you like about that design when talking to your designer. Professionals don’t recreate a photo—they incorporate accessibility, functionality, ease of modification, style and value into your design.and
9. Make your selections. Deciding on products and materials is a larger process than most imagine. With so many options to choose from, product selections are one of the primary reasons for project timelines to get extended. Base decisions on quality, function, price, style and availability. Include selections in the contract to lock down pricing and keep your budget intact.
10. Create a communication plan. A common downfall in remodeling is lack of communication between homeowners and remodelers. Your remodeler should lay out a communication plan at the beginning of the project. If not, ask them to do so. This plan should clarify roles of everyone involved, communication methods, availability, and frequency of communication that is expected.
As an industry that struggles with a persistent negative perception of remodeling contractors, these tips serve both the industry and consumers in elevating real professionals from the pack.
For more information, visit www.NARI.org.
To learn more about Coastal Realty Connections or get more real estate information, please contact us at email@example.com.
The secret’s finally out. One of our favorite up-and-coming counties in North Carolina has seen record growth numbers in terms of population, jobs, and housing over the last several years. Brunswick County, off the North Carolina coast, has seen a 47% growth in population over the last decade, and is steadily increasing residents each year. With recent job growth and housing appreciation on the up – it’s no wonder families and retirees from all over are flocking to the coastal communities more so than ever. Whether it’s the beautiful location, active lifestyle, or quaint community feel – you’ll find many reasons to consider Brunswick County your new perfect place to call home.