Archive for April, 2009
Staying A Float in Today’s Real Estate Market
April 3rd, 2009 categories: Loan Modification
Are you trying to stay a float on your mortgage? Most people are over their head in debt and are sinking fast and need a life support.
Most people who are struggling today want to keep their homes but do not understand what they need to do to nor do they know if this is the best plan for them.
We have all read about “Loan Modification Programs” but what people really want to know is will a Loan Modification Program help them?
Following are a list of questions you need to ask before talking with your lender about a Loan Modification Program.
What is Your Loan Balance?
How much do you owe on your home. Your monthly mortgage statement will show your loan balance each month. Your monthly payment is also there with the amount going to principal, interest, taxes, and insurance.
What do You Think Your Home is Worth?
Based on today’s real estate market what do you think your home is worth. The difference between what you owe and the current market value is your equity. You should have a minimum of 20% equity in your home to refinance your home or do a loan modification.
If you have no equity in your home or your home is worth less than what is owed you might be a candidate for a “Short Sale”.
Do You Have a Job?
This might be one of the most basic questions to ask. If you are employed and have a pay stub from your employer then look to see what your gross income is per year and divide this number by 12 months to determine your monthly gross income.
If you are currently not working then it is not possible to do a loan modification program.
Debt to Income Ratio’s
Do you find too much of your income goes toward your mortgage and you have less money each month for other living expenses. If you do then you are not alone.
Typically we should not be spending more than 31% of our monthly income on housing.
In order to figure this amount just take your monthly income and multiply by 31% and you will see how much you should be paying on a mortgage.
( Example: $50,000 annual salary divided by 12 months= $4,166 monthly gross income. $4,166 X .31%= $1,291.67 maximum mortgage payment per month)
If you are paying more than 31% on your mortgage then you need to find a more affordable home.
How is Your Credit ?
If you pay your bills on time then you should have good credit. FICA scores of 700+ are good credit scores and are required to modify your loan.
If you are having problems paying your bills on time this too will affect your credit and more than likely affect your ability to do a loan modification.
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Are You Upset about Declining Home Values?
April 2nd, 2009 categories: For Sellers, Local Markets
Are you upset about declining home values in your neighborhood. If you are you are not alone.
The other day I was asked by a neighbor to do a “Market Value” on her home because she is a senior and is thinking about selling her home and moving to a retirement community.
When I completed the “Market Value” I was shocked to see the lower value of homes even in my own neighborhood.
I remember 15 years ago several neighbors decided to put additions on their homes and we used the same contractor and were very happy with the results. Each year we saw our home values increase as a result of our home improvements.
Today is a different story. There are 3 homes on my own block which are listed as “Short Sales” and another 3 homes in the neighborhood that are bank owned foreclosures.
On a personal level I feel very sad about the current affairs of my neighbors and my neighborhood. I also realize that home values will continue to decline in my neighborhood just like other neighborhoods and there is little I can do about it.
I do have confidence that the home values will eventually stabilize and we will see the real benefits to home ownership in the near future.
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