10 ways to save you money in 2011

With the tightening of mortgage standards in the past few years, many have questioned, "How can I qualify for a loan these days?" Well, here are 10 tips that can help you get that sought after loan with a decent interest rate, meets your needs, and can save you money!

1. Have the right credit score. Sure it seems like a "no-brainer", but nowadays credit is more important than ever! In the past the best deals required a score of 720. Now, they require a score of 740. With the state of the economy and many people losing jobs, having to short sale, or foreclose on their property... it's fair to say that there aren't a ton of people with this score. If you are one of many who have had a significant impact on their credit in the subsequent years, whether or not you plan to purchase a house within the next year, Contact me. I can get you in touch with a credit repair company that can get you back on track and fix your credit in as little as 90 days!

2. Protect and Preserve your Credit Score. Again, this is an obvious tip, but probably the hardest. It reminds of junior high and high school, when the teacher started off the year by stating, "You all have A's. It's up to you to maintain it." Consider hiring a company like Life-Lock, that can keep you up to date with any misuses or hits on your credit. This will give you the greatest chance of maintaining the credit score you've worked so hard to maintain.

3. Shop Around. Don't just look for who has the best interest rate. Consider the other costs- discount points, and even the type of loan. Is it an adjustable, fixed? Holden Lewis of Bankrate.com suggests comparing the total fees and monthly payments that you would make under 3 or 4 loan deals to figure which option works best for you and your family.

4. Know you're borrowing limit. The FHA suggests that your house payment should equate 31% of your gross monthly income. Some housing counselors suggest a safer 28% or 30%. Roughly, if your monthly income is $4,200 before taxes. According to the FHA percentage of 31% you can afford a monthly house payment of about $1,302. The monthly house payment includes the principal, insurance, taxes and association dues.

5. Don't "reset" your Refinance Calender to 30-years. In other words when you've lived in a property for 5 years, ask your lender to amortize the loan for the remaining years of the old loan. By shortening the length of the loan you end up saving money on interest that is automatically included in your monthly payment. It may raise your monthly payment, but in the long run will actually save you a lot of money.

6. Consider a "no closing cost" Refi. If you are fortunate enough to have positive equity in your home, but you don't have a lot of money around you may think you can't qualify for a refinance. Think again! With a "No Closing Cost" Refi you can get your loan refinanced and not pay anything out of pocket. Holden explains that you end up paying a slightly higher interest rate as the closing cost gets factored in to your monthly payment.

7. Small downpayment? See the feds. Most lenders require 10% of the home price to be used as a downpayment, refinancing requires at least 10% of equity to qualify. For those borrowers with good credit, try applying for an FHA loan. They only require a 3.5% down payment. If you are a veteran, apply for a VA loan, no down payment is required. For those who aren't veterans or won't qualify for an FHA loan go to http://www.americandreamdownpaymentassistance.com/state.cfm?code=NV.The American Dream Down Payment Act is a down payment assistance program that gives grants to assist low-to-mid-income families and uniformed employees such as, policemen, firemen, sanitation, maintenance workers, and teachers achieve homeownership. The link above is for the State of Nevada.

8. Small loans? Act early. In the past lenders were paid a certain percentage of the loan. The more money they lend, the more money they would receive. Changes made April 1st have since made it illegal for lenders to be paid this way. In the past those that needed smaller loans or loans less than $100,000 weren't given the time of day. Now, big lenders like Wells Fargo as well as the small independent lending brokerages are more willing to lend to these kinds of borrowers. Since there are many a home here in Las Vegas that is under $100,000, this change is an important change.

9. Make an extra payment any time of year! You've probably heard that an extra mortgage payment made at the end of the year will shorten the repayment time. This is true. But, you don't have to wait until the end of the year, how about sending in that payment after you received your tax return, or after a bonus? Not only will it save you interest and shorten your repayment, but may come in handy at the end of the year when we all tend to spend a bit more.

10. Behind on your payments? See a housing counselor. According to a study by NeighborWorks America, Delinquent homeowners who receive Department of Housing and Urban Development-certified foreclosure counseling are more likely to keep their houses and not lose them to foreclosure. When late-paying borrowers get counseling, they are more likely to get a mortgage modification, which can reduce their payments. Click here for Housing Counselors in Nevada. http://portal.hud.gov/hudportal/HUD?src=/states/nevada/homeownership/hsgcounseling

The most important factor when deciding on purchasing a property is to shop around! Talk to several lenders- ask about their interest rates, their fees, discuss your needs and find out how much home you can afford. These factors will all come to play when you are ready to purchase a home. Not only will it help aid in the type of home, area and how much to put an offer in on... but can be very helpful when we negotiate the offer- like when asking to have your closing costs paid by the seller!

For more information about the Credit Counseling company, or if you would like to speak with some lenders, please don't hesitate to contact me at kathy.herron@cbvegas.com.

Foreclosure Sales: A First Step in Recovery?

A few years ago when the banks flooded the markets with foreclosures prices dropped fast. Ever since then homeowners have been fearful of another wave referred to as the "shadow" industry that would cause the home prices to go down even further. But economists and real estate agents across the country are noticing that the hardest hit cities are actually seeing the first steps in recovery because out of state and international buyers are scooping up these foreclosures.

The low prices are leading investors to snap up foreclosed homes in Detroit, Las Vegas, Miami, Phoenix and Tampa. The severely low priced homes are reducing prices in the short run, but they're also thinning the supply of homes -- clearing the way for higher prices in the future.
For some buyers, the deals are now too good to pass up. A highrise studio condo on the Las Vegas strip that cost $500,000 at the height of the housing boom is now selling for roughly one-third that price. Across the valley, we've seen an average drop of almost 60%.

News reports suggest that "such sales have helped shrink the combined supply of unsold homes in those five cities by 13 percent over the past year, according to an analysis of local listing data. Home prices in each of those markets are at or below 2002 levels, according to the latest reading of the Case Shiller index."

"If we were to see several consecutive months of supply getting smaller, it would point to an improving housing market," said Celia Chen, senior director at Moody's Analytics. "Even if it is investors buying them, they are renting them out in hopes that prices in the next several years will rise." As of today there are only 14,015 homes currently available here in Las Vegas, which is about a 4 month supply- a great sign we are on our way to a recovery. There are 12,787 homes that currently have offers on them (a bulk of these are short sales waiting on bank approval), and 14,232 homes that have sold year to date.

It's important to get rid of foreclosures and other risky properties so the market can turn around. When foreclosures and distressed properties are sold, home prices fall. But as the supply of cheap homes shrinks, prices stabilize. Homeowners who had put off moving because they didn't want to sell during the downturn grow confident that they can fetch a decent price. That prompts more buying and selling and thus forces home values to rise.

Most of the current foreclosure sales involve investors: Private equity firms; foreign and out-of-state buyers seeking vacation houses; individual investors hoping to rent out or quickly sell properties for a profit.
In March, 35 percent of previously occupied homes sold were bought entirely in cash, according to the National Association of Realtors. Here in Las Vegas it's actually about 50% of all sales.

Economists caution that a second wave of foreclosures could throw the housing market back into turmoil and few see home prices rebounding before the end of this year. However, with the current focus forcing banks to do more to help people stay in their homes, and create programs that shorten the short sale time frame, it's hard for me to believe this will occur again. If anything I think it may just become a small, but consistent, trickle.