Real Estate Really

Interest Only Loans.....Again?

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Some of the major banks, like JP Morgan Chase, want to push President Obama to expand its mortgage-modification program to allow interest only periods on reworked loans.  This is their way to bring more homeowners into the initiative. 

Excuse me, but won't this only postpone defaults? What's next making homes affordable by allowing interest only loans again? 

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Real Estate Bubbles

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Well folks, not a pretty picture! Looks like we may be heading for another housing bubble, even in the Northern Virginia area. The banks seem to be holding back on a very large inventory of foreclosed homes, and, equity sellers are still a little concerned about putting their homes on the market. This has resulted in a lower resale inventory. Right now we have predominately "short sale" houses listed on the housing market. Even those are getting snapped up quickly. All this has resulted in multiple offers and subsequently escalating sales prices. Sound familiar?

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Pre Qual or Pre Approval

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Do you know the difference between a pre qualification and pre approval when securing financing for the purchase of a home.  They aren't the same!

A pre qualification is an informal estimate, usually done over the phone without any documentation, of the amount a borrower may afford to borrow.

A pre approval is a lender's conditional commitment to lend to a specific borrower, following receipt and review of financial records and a preliminary approval process.

Always get a pre approval letter from you lender when submitting an offer on a house.  Keep in mind this is still not a full loan committment from the lender.  You are only fully approved after all your documentation has been reviewed and accepted by the lender's underwriter.

Just something to think about!

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Monthly Principal & Interest Rate Chart

 Check out this handy chart to figure out the principal and interest on a loan.  Keep in mind this does not include any taxes or insurance.  All together Principal, Interest, Taxes and Insurance are commonly referred to as PITI.  Tax information can be easily obtained through your REALTOR.  Insurance quotes can be obtained with a quick phone call to any insurance company.  When you finally do have to get insurance, make sure to discuss all insurance options.  You'll want to make sure that you are fully covered.

Download Rate Chart

Foreclosure Avoidance Options

Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to residents for foreclosure are many, including but not limited to short sales. Following is a brief explanation of these solutions: Reinstatement A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender's approval and will 'reinstate' a mortgage up to the day before the final foreclosure sale. Forbearance or Repayment Plan A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe. Mortgage Modification A mortgage modificationinvolves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage. Rent the Property A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage. Deed in Lieu of Foreclosure Also known as a 'friendly foreclosure,' a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property. Bankruptcy Many have considered and marketed bankruptcy as a 'foreclosure solution,' but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution. Refinance If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage. Servicemembers Civil Relief Act (military personnel only) If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief. Sell the Property Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area. Short Sale If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short salewith their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more. This represents only a summary of some of the solutions available to homeowners facing foreclosure. Locate a CDPE in your area for an evaluation of your individual situation, property value, and possible options. Understanding your options now could mean all the difference in the world. A CDPE can help.