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How Much House Can I Afford? Affordability analysis test

admin — Fri, 08 Jul 2011 17:40:21 +0000

Purchasing a new home is the biggest investment of my life so it is essential to have a realistic idea of ‘how much house can I afford’ before entering negotiations or give sellers an offer to purchase. As a newbie home buyer, it is important to know what comfortable home value fits your budget and how can you avail affordable home mortgage loan. Remember, a mortgage lender considers several financial factors before sanctioning the potential buyer’s loan proposal. They evaluate the risk involved with the mortgage deal and check your ability to pay back a mortgage. The mortgage lenders take into account the buyer’s debt to income ratios, FICO credit score, employment duration, history of good debt management, bill payment history, and current financial obligations such as credit card debt, child support, student loans, auto loans, alimony, business expenses, etc. Read on to get a clear idea of the financial issues which actually matters while borrowing a mortgage loan.

Risk calculation by Home Mortgage Lenders

Maximum lenders generally compare GMI (gross monthly income) to total monthly home expenses or to home expenses plus over recurring debt. The traditional lending institutions are more stringent in their regulations and tend to stick to this rule whereas the more common FHA loans are a little more lenient and loosen mortgage restrictions if the individual has a good financial appearance.

Comparing Gross Monthly Income to Total Monthly Home Debt

A home buyer must sum up all sources of income including working income, rental income, dividends, pensions, and other reliable income prior tax deduction and divide them into 12 monthly values. Then find the total probable monthly home expenses which are the monthly mortgage for principal and interest, as well as total annual property taxes and hazard home insurance divided by 12 months. Now divide Total Monthly Home Debt by GMI. As a buyer your goal must be to keep the ratio at 28% or below, to evade creating higher obligations for the buyer and greater risk for the mortgage lender.

Comparing Gross Monthly Income to Total Recurring Monthly Debt

Add all the recurring debts that last longer than 6 months and require minimum payments to avoid penalties like car payments alimony, child support, student loans, business investments, etc). Then divide it by GMI (gross monthly income). This ratio should be less than 36% for traditional loans, or can possibly increase up to 41% with more lenient and popular FHA loans.

How long the buyer expects to be in the property

It is a crucial question that a mortgage lender asks to check the buyer’s financial planning for future. If the duration is less than 2-3 years, perhaps renting may be a more financially savvy option for you due to the expenses of real estate fees, closing costs, maintenance, landscaping. However if the buyer expects to have a large increase in salary and raising working hours perhaps an adjustable rate of mortgage can be available.

Down payment and closing cost

A buyer needs to determine the amount of down payment available, as most FHA loans require 3 percent to 5%, and conventional loans may need up to 10% depending on the approval process. Closing costs need to be added to the down payment to calculate the total amount at closing. Make sure the loan value is large enough to cover the remaining home expense after closing costs and down payment have been calculated into the situation.

Credit score

Credit score plays a substantial part in determining the interest rate on your loan and your mortgage pay therefore find ways to increase your credit score before applying for a loan. Pay all bills on time and stop opening new lines of credit. If possible, get a free credit report from each of the three major credit score organizations a year, and immediately rectify if any discrepancy found in your credit report.

To summarize, knowing how much you can afford to pay for your house will certainly help you to meet your future expenses.

U.S. housing prices show some gains

admin — Sun, 03 Jul 2011 03:39:06 +0000

It was a mixed bag for housing prices in April with prices up in some markets, for the first time in eight months, while prices were down in several other markets.

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Existing home sales fall 3.8% in May to lowest rate in six months

admin — Mon, 27 Jun 2011 03:38:23 +0000

Sales of existing homes in May fell by 3.8 percent from a month earlier to a seasonally adjusted annual rate of 4.81 million, according to a report by the National Association of Realtors.

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S&P downgrades China’s property market rating

admin — Tue, 21 Jun 2011 03:38:18 +0000

Credit ratings agency Standard & Poor’s announced that it had downgraded its outlook for China’s property market to negative from stable over concerns about the government’s decision to tighten its credit policy.

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Habitats | Clinton Hill, Brooklyn: Adopted by a Brownstone

admin — Mon, 20 Jun 2011 14:01:49 +0000

Jenny Salomon, an artist, lives in a magnificent restored brownstone that often functions as a de facto exhibition space.

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How Biweekly Mortgages Protect your Biggest Investement

admin — Fri, 17 Jun 2011 08:47:12 +0000

Have you ever asked yourself whatA¢a‚¬a„¢s probably the biggest investment in my life? Your home or is it your home mortgage? Did you know these facts about your 30 year home mortgage? You end up paying back between 200% to 300% of the amount you originally borrowed to purchase your homeA¢a‚¬aEÂthat means if you borrow $200,000.00 to buy your home, youA¢a‚¬a„¢ll end up paying back between $400,000.00 and $600,000.00 at the end of your 30-year mortgage. If you’re presently in your 40s today, youA¢a‚¬a„¢ll be in your 70s when you pay off your 30-year mortgage. If you’re in your 30s today, you’ll be in your 60s before you pay off your 30-year mortgage. After paying your mortgage for ten years, youA¢a‚¬a„¢ll still owe nearly 80% of what you originally borrowed. Now, you maybe asking yourself? How much can a bi-weekly program help me? Typically a bi-weekly mortgage programs will eliminate up to five to seven or more years off of a 30-year mortgage. Imagine not having to make up to five years of payments! Imagine not having to make those 60 payments, 12 payments a year for five years equals 60 payments. Find out how much you can save. Visit biweeklymortgagetips.com to get a free bi-weekly mortgage calculator, receive a free bi-weekly mortgage guide to reclaiming your American dream where you own your home, not the bank, but you own your home free and clear and save up to five to seven years off of your mortgage. Get a free classified bi-weekly mortgage case scenario report and other free resources for free membership. Visit biweeklymortgagetips.com today.

Learn how to make a simple change to the way you make your monthly payment that can have an enormous impact on eliminating unnecessary interest. Completely eliminate up to seven or more years off of your mortgage. Eliminate PMI or Private Mortgage Insurance sooner. It eliminates sooner because you pay off your principal balance faster and learn how to become a mortgage savvy consumer and save up to 25% of the interest that you would normally pay on your 30-year mortgage otherwise. Get back in control of your mortgage and reclaim your American dream of true home ownership! Tilt the tables back in your favor, not your mortgage company, your favor for you and your family. Save unnecessary interest! Reclaim your American dream of true home ownership! Visit today for instant access to the biweeklymortgagetips.com members area. Reclaim your American dream of true home ownership!

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Ten Year Mortgage Veteran discusses his personal discovery of the importance in committing to using a third party Biweekly Mortgage Program – after having completed nearly eight years of his ‘do it yourself’ biweekly program – he reluctantly admits to having disastrous results. Due to lack of cons

Food prices push China’s inflation to 34-month high in May

admin — Thu, 16 Jun 2011 20:28:33 +0000

Linda Young – AHN News Writer

Beijing, China (AHN) – Inflation in China is running at a 34-month high fueled by increases in food prices that are hitting consumers hard there despite efforts by the government to curb the rise.

A sharp increase of 11.7 percent for food prices led the increase in the consumer price index.

Chinese consumers saw prices rise by 5.5 percent in May compared to the same month a year ago, National Bureau of Statistics officials announced Tuesday.

In addition, analysts do not see an end in sight any time soon and forecast a CPI increase of 6 percent for June.

Chinese authorities have set a target of 4 percent inflation rate for the year, but the May figures pushed that to 5.2 percent on an annual basis so far.

The central bank is expected to raise interest rates again to try to achieve the 4 percent annual inflation rate goal for the year. However, the central bank has already raised interest rates four times since October in an effort to cut lending and rein in inflation.

Food prices account for one-third of the CPI. The 11.7 percent increase in May compared to a year earlier came on top of an increase of 11.5 percent in April from the same period in 2010.

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Foreclosures Grow in Mortgage Market’s Top Tiers

admin — Tue, 14 Jun 2011 10:55:14 +0000

New data suggest that foreclosures are rising in more expensive housing markets. About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new information from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. The report shows that foreclosures, after dying earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all foreclosures. “The slope of that curve in recent months is much sharper than it was recently,” said Stan Humphries, chief economist for Zillow. Rising foreclosures among more-expensive homes could create added pressure for a housing market that has shown signs of stabilizing in recent months as sales of lower-priced homes pick up. The Zillow research compared homes against the median values for their local market and broke each market into three tiers by value. Zillow then looked at the share of monthly foreclosures in each tier over the past decade. Foreclosures are rising in more expensive markets as home values in those areas fall, leaving more homeowners with mortgages that exceed the value of their properties.

Prime loans accounted for 58% of foreclosure starts in the second quarter, up from 44% endure year, according to the Mortgage Bankers Association. Subprime mortgages accounted for one-third of foreclosure starts, down from one-half last year. The prime classification includes so-called exotic mortgages that were increasingly derived to buy more expensive homes, including interest-only mortgages that allowed borrowers to defer principal payments during an dawning period. Borrowers often aren’t able to refinance out of these products because the drop in household values has departed them with little equity in their homes. Default rates are particularly high and expected to rise on option adjustable-rate mortgages, which allow borrowers to dig out minimum payments that may not cover the interest due. Monthly payments can grow to sharply higher levels after five years or when the outstanding balance reaches a definite level. A study by Fitch Ratings discovered that 46% of option ARMs were 30 days past due last month, even though just 12% of such loans have reset to higher monthly payments. Zillow estimated that nearly one in four homes with mortgages was desirability less than the value of the home at the end of June. Mr. Humphries said he didn’t expect to view foreclosure volumes level off until later in 2010.

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San Diego Mortgage Group has been financing California home financing for 28 years. Our experience and honest approach make us the premier mortgage brokerage firm in California.

Hamilton Heights: Awaiting a Bounce

admin — Sun, 12 Jun 2011 14:07:10 +0000

A new Columbia University satellite campus in Manhattanville is giving the neighborhood next door an extended turn in the limelight.

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The Mysteriously Shifty Interest Rate And Housing Industry

admin — Sat, 11 Jun 2011 12:48:53 +0000

Mortgage rates dropped yet again early last week, but then ended on a sour note as prices of mortgage backed securities fell steeply. The average rate on 30-year fixed mortgages fell further below 5%, according to the weekly survey issued by Freddie Mac. Losses on mortgage backed securities continued all the way into the close of the day, which forced banks to reissue higher mortgage rates. We do have some potentially market moving data being released this week which could help slow the pace of rising mortgage rates, mainly the Fannie/Freddie news releases late in the week.The 30-year fixed-rate mortgage averaged 4.87% for the week, which was the lowest since May. The average for the week prior was 4.94% and the year prior was 5.94%. Also, rates on 15-year fixed-rate mortgages were 4.33%, which is the lowest interest rate of it’s kind on record. But, how is this effecting the mortgage industry, and where are mortgage rates expected to go? In order to secure a mortgage in todays economic climate, the borrower generally must have 20% for a down payment and a FICO above 740. This limits the pool to a small percentage of borrowers eligible for optimal financing or refinancing. However, the falling rates have spurred an increase in refinancing activity, which reached a 19-week high last week. The number of U.S. mortgage applications fell last week with a 5 percent rise in interest rates on 30-year mortgages.

The Mortgage Bankers Association said rates on the most widely used loan, 30-year fixed mortgages, rose above 5 percent for the first time in a month after falling to a four-month low. Mortgage rates being below 5 percent is regarded as a psychological threshold, and has increased mortgage refinancing activity dramatically. Any positive statistic in the housing and mortgage industry has been attributed to low mortgage rates, high affordability and the federal government’s $8,000 tax credit for first-time home buyers. But this silver cloud has a grey lining. The stimulus inspired tax credit is soon to expire, and mortgage defaulted properties make up a large portion of home sales this year. So, any forward momentum in real estate and mortgage activity is not an indicator of the long-term outlook. Thomas Lawler, a housing economist, does not see the merit in extending the tax credit. “It is extremely expensive and the program does not directly impact the core issues facing the housing market, namely a weak jobs market and slow growth in household formation,” he said. To make matters worse, the American jobless rate in September hit a 26-year high at 9.8 percent. “The biggest cloud over the housing market right now is by far foreclosures and if it were not for that issue people should be feeling pretty good,” Lawler said. “People cannot look at the number of loans that are delinquent and not be worried.” The housing market, however, has shown some signs of stabilization. Home sales have begun to rise for the first time in over a year. And house price declines are leveling throughout the country, home prices in some areas have risen. Mortgage Rates are watched closely by those who regard them as the rudder to the real estate market.

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California Mortgage Refinancing Services by SD Mortgage Group. Our 58 years of experience in California home mortgages make us your best home finance option.