Huntsville Alabama Houses Blog

Financing A Home In Today's Market

In recent months, lenders have tightened their standards on lending practices, leaving many potential homeowners wondering if they can even obtain a loan. I spoke with a mortgage broker today regarding the opportunities available to my customers and here is what I found.

100% loans, although more scarce than they were a year ago, are still available. These loans are now strictly conforming, which means you must be able to verify income either through pay stubs or tax returns. You will also need a credit score above 620.

FHA loans, though not 100%, will still work with down payment assistance, such as that provided by the city of Huntsville or another down payment assistance program.

If your credit scores are below 620, don't fret. You may still qualify for a loan as long as you provide some kind of down payment, and of course, proof of income. This down payment could come from your own funds, a gift from a family member, or even through a down payment assistance program.

If you are looking to buy a home and have been reluctant because you aren't sure you can qualify, give it a shot. Contact a mortgage broker, let them pull credit for you, and see what programs they have available for your current situation. Don't worry about your credit being hurt by a mortgage enquiry. Those don't hurt your score unless you do it several times within a year. You never know until you try.

Most lenders want to keep your debt to income ratio below 35%. Basically, you total up all your monthly minimum payments towards debt (this only includes things on your credit report), total up your monthly income and divide the monthly debt by your monthly income. This will give you your current debt to income ratio. Let's say it's 20%. A lender will look at this and see you can afford up to an additional 15% debt. This number is multiplied by your income to see what monthly mortgage payment you can afford. Then, based on current interest rates, the lender works backward to see what price home you could qualify for.

Feel free to search MLS listings on my web page to see what's out there. Don't know what you can afford? Check out the handy calculators on my page to calculate your debt to income ratio and therefore what price range you should focus on.

When you are ready to purchase, you know who to call. :)

Agents Falling For "Get Rich Quick" Schemes

In order to keep our license in Alabama, an agent must take 15 hours of continuing education. One of the most important classes is the ethics class which covers the Code of Ethics agents and brokers are supposed to follow.

One of the motivating factors for me to become an agent was the lack of trust and disdain the general public has toward most agents. I've always had positive experience with agents, so I had no idea why the public distrusts them so much. So, I decided to be an agent of change and have met with varying degrees of success.

Like most agents, I've dealt with agents who weren't honest or simply pulled stunts that were borderline unethical. There aren't many out there, but they do exist and they give the rest of us a bad rep in the public's eye. Sad.

Putting that aside, let me get to the meat of this post. When you first become an agent, your email gets flooded with every marketer promising lots of leads, lots of training, and lots of business with minimal effort. Most of these programs do not work, albeit these are legitimate companies offering a service and there is no law against selling services that are SUPPOSED to work.

Since the housing bust kicked in, I've been flooded with emails from other so-called people who used to be agents who have now retired because they replaced their income within two months with an automatic program that makes them thousands per month without lifting a finger. One of the most frequent emails I get promises about a $1000 per day. I looked at the marketing tactics of what they are doing, and found nothing short of at least a near pyramid marketing scheme whereby money is made by signing other people up - Another get rich quick scheme.

It made me wonder...Are these really real estate agents? Or are they just people pretending to be an agent so they can relate to real agents to get those agents to trust them and sign up? I did my research and found my answer. Roughly half of these people were agents - nearly all of those still had active licenses and active web sites. So much for retiring.

I suppose my point is this. Agents and brokers have a bad reputation for various reasons and the "get rich quick" mentality many of them have does nothing to improve it. When agents begin "spamming" people with these "make $30,000 per month" emails, they may not be breaking any of the rules of the code of ethics, but they are proving to be the nieve type whose goal is the dollar rather than the customer.

The way I see it, if you take care of your customers the money will eventually come. Your reputation will precede you and success will follow in the future. Oh, and it takes longer than a couple of months. No successful business ever became so successful overnight. As the old cliche goes, "Rome wasn't built in a day".

Todd

www.HuntsvilleAlabamaHouses.com

Is Filling The Tank A Priority Over A Mortgage Payment?

I awoke this morning, following my usual ritual of opening up a cold soft drink and checking the news. Over the last few months, the real estate bust and gas prices have dominated the news, almost daily. And, there was no shortage of news on either one today.

I read a couple of stories regarding experts saying the "bust" is over since sales of existing homes have increased the last couple of months, albeit they were nowhere near sales levels we saw over the last few years. They also predict sales will boom again, but will take 15 years to get back to the levels and prices we saw in 2005 and 2006.

Another news story reported crude oil prices at record highs (again), and that OPEC is refusing to increase production for the summer months which is expected to drive prices even higher. As I type this, crude oil is approaching $130 a barrel, up 30% since January. Experts are predicting crude oil prices to exceed $400 a barrel in the foreseeable future.

Do you know what I find most interesting? In all these reports, I rarely see the two linked together. However, speaking with those attempting to sell their homes or those in foreclosure, the two are linked to each other. I suppose significant data is left out of those reports in order to support those theories. Experts and scientists both have a terrible habit of doing so and always have throughout history.

The experts and media simply aren't reporting the same thing I'm hearing in the real world. Here's the real world - Due to rising gas prices, people are being forced to sacrifice their hard earned cash to gasoline before other priorities up to and including their mortgage. After all, they have to be able to commute to work in order to pay their mortgages.

I've spoken with some people who are losing their homes to foreclosure because they can no longer make their monthly payments and pay for gasoline. Gas prices have more than doubled in the last year and food prices have risen 20% this fiscal year. Incomes have not risen anywhere near those levels and are not expected to.

I've also spoken to others who are not in foreclosure, but are trying to sell their homes either to downsize or move closer to their place of employment. However, they are having trouble finding buyers for their homes for the same reason they are selling their home.

Do I think the bust is over? No, not yet. Although I think the downward spiral has leveled out some, I personally don't believe the bust will be over until gas prices come down.

I still stand behind my prediction that the market will level out by late summer, but i do believe it will remain at that stagnant level for some time to come.