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Despite the ups and downs of the housing market and the decline in housing values, most homeowners, including those who are under water on their mortgages, don’t regret owning a home. In a new survey by the National Association of Home Builders, three out of four Americans believe that owning a home is the best long-term investment and is worth the risk of the ups and downs of the housing market, and 95 percent say they are happy with their decision to own a home.

That sentiment is also strong among homeowners who are under water on their mortgages. Nearly two-thirds (65 percent) believe owning a home is worth the risk of the ups and downs of the housing market and 83 percent of say they are happy with their decision to own a home.

Four out of five homeowners (80 percent) say they would advise a friend or family member to buy a home while slightly fewer (78 percent) of underwater homeowners would do the same. Only 19 percent of homeowners under water believe homeownership is too risky.

information from CRS “Member Connect” on-line newsletter

To add to the confusion, nearly one-fourth (22.9 percent) of buyers say applying for a mortgage was challenging because their lender kept changing the documentation requirements, while 21.6 percent say their lender used too much technical jargon and 20.7 percent say it was difficult to find a lender that was easy to work with. Borrowers considered these problems more challenging than the amount of time it took to fund a loan (19.1 percent) and qualifying for a loan due to their credit rating (6.9 percent).

Great info. from CRS Member Connect on-line newsletter

New research suggests buyers applying for mortgage loans immediately after house hunting often make poor choices—sometimes selecting the first loan option presented, regardless of the terms with which it is associated.KEEP THIS IN MIND

• The research, conducted by two George Washington University instructors, found “cognitive resource depletion” to be a determining factor in why some borrowers make poor choices in selecting a home loan. Cognitive resource depletion implies willpower is a limited resource that can be exhausted. The study suggests the depletion of willpower may be one reason borrowers choose loan products such as pick-a-pay mortgages, interest-only loans, loans with balloon payments, and mortgages with negative amortization.

• To test the theory of cognitive resource depletion, two test groups were created. One was presented with an online-shopping simulation, the other was not. The group completing the simulation then was tasked with selecting a set of mortgage alternatives. The second test group only was asked to select a mortgage product. Almost half of those participating in the house-shopping exercise selected a higher-risk mortgage, while less than one in five of those who did not participate in the experience selected a higher-risk mortgage.

• Although most sales contracts require buyers secure financing within a designated time period, the authors of the study recommend even financially savvy borrowers institute a waiting period of at least two days after selecting a home to purchase before applying for a home loan. To address this, the authors and most real estate professionals advise home buyers apply for a home loan and receive preapproval prior to searching for a house.

 

reprinted from CAR’s “Market Matters” newsletter, original article: LA times

 The APR is the final rate the lender charges you annually.  After adding on any loan fees that are involved and points that will be charged, the final rate will usually be higher than the prime interest rate.

 When applying for a mortgage, the lender must notify you about the APR within three days of receiving your application.  The APR may change before final settlement, but there are limits on how much it can change.

 So while shopping for a mortgage, make sure you know the annual percentage rate, as well as what you will have to pay for points, application fees and mortgage insurance.

 Being fully informed is the only way you will be able to make the best decision.

One of the first things you should do when shopping for a home is to obtain prequalification for a home loan.  This will help you understand your budget and narrow your home choices.

In order to get a mortgage, you will need to provide proof of income and assets.  The amount of necessary paperwork will vary somewhat from lender to lender, but most likely you will need:

• Federal income tax returns for the previous two years.
• If you are self-employed, 1099 forms and year-to-date profit/loss statements.
• Three recent consecutive paycheck stubs.
• Three consecutive bank statements.
• Investment and savings account statements.
• Recent year’s canceled rent/mortgage check or other verification of payments.
• Documentation of additional mortgage loans or rental properties.
• Recent statements from each of your credit card companies.
• Recent statements or other documentation of car loans, student loans and other debt obligations.
• Divorce documents or other legal documentation, if applicable.

If you have questions or concerns, feel free to contact me anytime.

Brian Ripp, CRS, GRI
Broker, Notary, Property Management  
Realtor since 1985
 DRE Lic. 00886348

 What documents will I need to provide?  You will need to provide proof of income and assets, but the amount of necessary paperwork will vary somewhat from lender to lender.

            How much time will it take to process my mortgage loan application? It typically takes between 30-90 days, however, the actual time will be determined by how soon the lender can receive an appraisal of the property, verify your information, and obtain a credit report.

            What is the lowest acceptable down payment?  The amount of the down payment will determine whether you need private mortgage insurance (PMI) and will be a factor in the interest rate and loan terms you can receive.

            What is the annual percentage rate?  Keep in mind that after the lender’s fees are added, the rate may be higher than what you were initially quoted.  Ask if you can lock in the rate for a specific time period.

   Getting a mortgage is just one step on the road to becoming a homeowner, but with a qualified real estate professional on your side, you’ll achieve your dreams in no time.

Brian Ripp, CRS, GRI, Broker – your Bay Area Realtor

www.BrianRipp.com serving Fremont, Newark, Union City & surrounding communities. Real Estate & Property Management.

Real Estate Market Weekly Update Webcast: http://realtytimes.com/REUv/BrianRipp