If you are single and have a modified adjusted gross income of $75,000 or less, and have never owned a home or haven’t owned one in the last three years, you will be eligible for the full tax credit on any home priced $80,000 or above. If you are single and your income is between $75,001 and $95,000, you may still be eligible for an adjusted amount based on your actual income. If you are married and your combined income is less than $150,000, you may be eligible for the full credit. Likewise, if your income is between $150,001 and $170,000, you may still be eligible for an adjusted amount. As previously mentioned, this must be your first home purchase or you must not have owned a home in the last three years. The home must be your primary residence.

For those Tarrant County home buyers that are ready to begin their search and try to take advantage of this tax credit, you would be well served to team up with an experienced Realtor@ that can facilitate the process of closing in a short amount of time. Your real estate professional can provide you with information about mortgage lenders and title companies. Getting prequalified for a home loan is essential and is required in many circumstances to make an offer on a home. If you are buying a foreclosed property, the bank that owns the property may require you to be qualified by their home mortgage consultants before considering any offers on their properties. Many times the bank that owns the foreclosed property will offer incentives to buyers that use them to finance their loan. This is another opportunity to save money and get a good deal on a home.

For more information on the first time homebuyer tax credit, please contact Dave or Betty Warden with Real Estate North Texas at 817-706-3291. We would be happy to assist you with your next home purchase.

All lenders analyze two different ratios when reviewing a loan application. The first is called the front ratio and it is the principal, interest, taxes and insurance on a property. For a conventional loan, the maximum limit is approximately 28% of the borrower’s gross monthly income. FHA loans have a slightly higher front end ratio of about 31%. The other ratio, the back ratio, is the borrower’s other monthly obligations, like child support, car payments, credit card payments, or any other loan payments are added to the principal, interest, taxes and insurance. On a conventional loan, the back ratio is limited to about 36% of the borrower’s gross income. FHA has a higher back ratio of about 43%. FHA has a minimum 3.5% down payment, which will require the borrower to pay for mortgage insurance. Conventional loans require at least 5% down payment, and require mortgage insurance if the down payment is less than 20% of the loan.

Even if you have sufficient income to qualify for a home, you’re debts and monthly obligations may prevent you from doing so. For those people that are paying off credit card debt, it is best to payoff small balances first, then, work on paying off larger balances. Make sure you make your payments before their due date. Late payments will affect your credit score, which will also limit the type and amount of loan you will qualify for. Keeping your debts to a minimum will help buyers to maximize their buying potential. Lower credit scores may require a higher down payment than those with credit scores over 700.

Even though a lender will tell you that you are financially capable of qualifying for a loan, please make sure to consider that after you move into your home, you may need to buy things like appliances, furniture, or maybe even a new car. You may be able to barely qualify for a particular amount with no debts, but if you anticipate future monthly payments in addition to your new home, be sure to consider these when you make your decision on which home to buy. Also, take into consideration that property taxes may raise in the future, especially if you are purchasing a new home. The first year in a new home, your property taxes are based on unimproved land. The next year, you will have to pay the taxes for improved property, which may result in an increase in your monthly payment. Be sure to consult your Realtor about the possibility of this occurring.

Home ownership is a great experience. For more information about buying or selling a home, please contact Dave or Betty Warden at 817-706-3291.

If you are currently a homeowner and you’ve decided that now is the time to sell your house, you will need to decide where you are planning to move after your home sells. If you do decide you want to purchase another home, and you will be using financing for the purchase, you may want to get a copy of your credit report to check for errors that may be affecting your credit score. If you’ve been in a home for a long period of time and have not recently applied for a loan, the importance of a good credit score has never been more important since all the recent loan defaults in the real estate market. This is a great time to request a copy of your credit report from one of the three credit bureaus and verify that your credit information is correct.

If you are a first time homebuyer you may not be familiar with the fact that the better your credit score, the better interest rate you will receive from your lender. If your credit needs some improvement, you may be able to obtain a loan for a home, but you can expect to pay a higher interest rate. This will affect the sales price of the home you can qualify for. Your credit score is a numerical score based on your credit history. If you have late payments or delinquencies on your credit report and you believe them to be incorrect, you can dispute these with the credit bureau. It does require a bit of time to make corrections to your credit report and if you want to take advantage of the government tax credit, time is running out to meet the December 1, 2009 deadline.

At present, the lowest credit score that buyers can qualify for a mortgage is 620. Although your credit report does not give your actual credit score, if you find reporting errors, your credit score may be lower than it should be. Even if you aren’t planning to buy a home for another year or more, it’s a good time to check out your credit report and see if there are areas where you can improve your creditworthiness for the future. Most lenders require a higher down payment for those buyers with credit scores under 700, sometimes as high as a 20 percent down payment.
Since the real estate market is showing signs of recovery and the availability and affordability of homes is better than in recent years, take some time to review your credit report to make sure you are in the position to buy when the time is right for you.

Effective July 30, 2009, new rules were implemented that are designed to help borrowers determine whether or not the loan they are applying for best suits the borrower’s current financial position. The changes are an attempt to keep the borrower better informed on the cost and payments of their loan and hopefully eliminate surprises at closing time.

One important change requires the lender to disclose to the borrower the cost of their mortgage within three days of their loan application. No fees, with the exception of a fee to perform a credit check, are to be charged until all loan cost disclosures have been made.

The days of quick closing loans are now a thing of the past. After their initial disclosure is provided to the borrower from the lender, there is a seven day waiting period. This gives the borrower the opportunity to consider the costs of purchasing their home, and provides them the chance to reconsider and terminate the application. The final disclosures which had been provided at closing, which disclose the annual percentage rate of their loan, are now provided to the borrower three days before business days before closing. This gives the borrower an additional chance to review the costs and their obligations and either proceed with the purchase or terminate the contract.

While all this legislation designed to protect the buyer is beneficial to the borrower, home sellers need to be aware of these new rules, as they may contribute to delays in the closing and funding of their homes. It is important that all real estate professionals that represent buyers and sellers be aware of these changes and team up with proven lenders that are on top of these new federal rules. Making sure that all disclosures are provided on time and good communication between both sides of the sales transaction is essential to the successful sale of homes.

Please contact Dave or Betty Warden at 817-706-3291 for more information about buying or selling a home. We are teamed up with experienced lenders that will do their very best to close your home in a timely manner.

For those North Texas home buyers that are interested in taking advantage of the $8000 tax credit, please note that the sale of the property must be closed by December 1, 2009. For first time home buyers that are looking to purchase a foreclosed home, the complete process from the contract acceptance until the closing of the property can take anywhere from 30 to 45 days, and sometimes longer. In order to meet the deadline for the tax credit, buyers should have negotiated a signed contract at least 45 to 60 days before the tax credit deadline, which would be early or mid October. Lenders and the banks that own these foreclosed properties are anticipating a rush of activity before the December 1 deadline.

As a result of recent changes in the appraisal process and other requirements that lenders must meet, closing delays are more common than in the past. With the abundance of home choices and the competition with other home buyers for well priced homes, buyers should have a sense of urgency to find a home, negotiate a price, and keep on top of all the people involved in the closing of the sale.

If you are looking for a Realtor that is experienced with buying and selling foreclosures, HUD properties, or other real estate transactions, please contact Dave or Betty Warden at 817-706-3291. We would be happy to assist you with the sale or purchase of your home.

First time buyers do not have many reasons to sit on the fence now. Excellent incentives await as President Obama’s stimulus package creates a multitude of options designed to save you a lot of money on your new home purchase. Looking to find that dream home in Keller, TX or maybe Grapevine, TX? The possibilities are practically endless. Perhaps an upgrade home in Southlake, TX or Colleyville, TX is in the plans for a young family wanting the best of schools.
What gives?
Right now and until December 1, 2009, qualifying homebuyers get a tax credit up to 8,000 dollars. The program works on a ‘slide scale’ process. Single prospects with income under $75,000 and married prospects with combined income under $150,000 qualify for the full $8,000 tax credit. Reduced tax credits are available for those with higher incomes. Best of all this tax credit requires no repayment providing that the new homeowners reside at the property for a period of 3 years or more. To qualify for these special tax credits the prospective homebuyer or homebuyers must not have had owned a primary residence within the last 3 years before the purchase of a new home. And of course if you have never had a primary residence then this program applies to you also.
Where to?
As I mentioned at the top of this article, there are a multitude of options available. I have received several emails from the lenders I work with. These guys are extremely excited with the new incentives being offered to the home buying public. What are they excited about? How about a USDA loan with zero down financing (yes, its still available) and a 8,000 dollar tax credit or an FHA loan up to 271,000 with credit scores in the 500’s. Interest rates inevitably will be lower for those with better credit scores, but rates are historically lower than ever. How about a 4.75 interest rate on 30 year fixed rate mortgage? Two lenders I would call FHA experts are Shelly Allred with Wells Fargo in Fort Worth, TX (P817-846-5913) and Tom Sutton of Countrywide in Southlake, TX (P817-247-6799). Give them a call to see what they can do for you. I have worked with them, I like them and I know you will too.
Dave Warden, 817-706-3291

Winter slips into the distant past as spring time home sales increase. Families of school age children are trying to close on their new homes and settle in before fall brings a new year of education.
Here are some ways to better position yourself for the ample opportunities currently available in today’s real estate market and help you and your family get the lowest interest rate possible.
Getting your score.
There are lots of websites that offer to send you credit scores; however, the one directly related to the 3 major credit bureaus is FreeCreditReport.com. Do yourself a favor and before beginning your new home search take the time to retrieve your credit scores from the website and be sure that no errors exist, as sometimes occur. Also, see what areas can be improved by paying any delinquent bills or paying off any outstanding credit cards. Your preferred lender will be looking at these items carefully when applying for a loan. Work directly with the credit bureaus to clear up and improve your score. After all, your credit score will determine how good of an interest rate you can expect to receive from potential lenders.
Getting your Realtor.
Now that you have your credit score in tip top shape, give us a call. We’ll get you started on the right path to your new home. You should have a relatively good idea of the general vicinity in which you want to purchase a new home. Consider schools, access to major roads for easy commuting, arts, entertainment, churches and eateries. As far as neighborhoods are concerned, you may want to consider the number of foreclosures in the area, current market value dips and possible recovery rates. Property values have dropped in most areas of the metroplex, however some areas stand to recover quicker than others. If you plan on staying in the house long term, recovery speed for market value may weigh so much on your decision as to where to purchase. In any case, spring is in the air, it’s a great time to be a buyer and we are ready to assist you.
Dave Warden 817-706-3291

So, today, we are going to begin explaining some common mortgage terms to help you along on the journey to owning Greater Fort Worth real estate. 

Alternative financing:  This term refers to the types of mortgages that are in the news this year and include adjustable rate, graduated payment, buy-down and hybrid mortgages.  Some start at an initially lower rate.

Amortization:  These types of loans apply a large portion of the payments in the early years of the loan to the interest, leaving the principal to be paid during the later years.

Assumable loan:  When a buyer takes over payments for someone else’s loan, he can save thousands of dollars in closing costs and loan origination fees by only paying a small assumption fee.  FHA and VA loans are assumable but most conventional loans are not.

Closing costs and prepaids:  Money needed in addition to the down payment on closing day.  These can include fees for an attorney, loan origination, appraisal, credit report, document prep, escrow, survey, recording, tax escrow, hazard insurance, flood-zone certification, and private mortgage insurance. 

Disclosure:  Document describing terms, conditions, interest rate caps, A.P.R. and other parameters of the loan.

Down payment:  The difference between mortgage amount and the purchase price.

Earnest money:  Deposit given to seller to show seriousness of buyer’s intent; this money is applied to down payment or may be forfeited if deal does not go through.

Equity:  This is the difference between the home’s fair market value and the loan amount.

Lock-in:  A period of time between 30 and 270 days that a lender will guarantee an agreed upon interest rate and points.

Market rate:  The average rate being charged by lenders for conventional, FHA, or VA loans.

Negative amortization:  This happens when the principal balance of the loan increases when payments are too low.

Origination fee:  The lender’s fees included in the closing costs.

Points or discount points:  Prepaid interest of one percent of the loan amount that can be paid to the lender to issue a loan below market rates.  Points may be tax deductible.

Prepayment penalties:  Fees charged to borrower for paying off a loan early.

Private mortgage insurance (PMI):  Insurance required with conventional financing if a buyer puts down less than 20 percent.  This is different from credit life insurance.

Qualifying:  After undergoing the process of proving to a lender the capacity to repay a loan, the lender agrees to a certain loan amount and terms.

Title:  A title to a piece of property that shows that the buyer has clear ownership.

Title insurance:  The lender requires the buyer to insure the title against future claims.  A borrower may also purchase it to protect their equity.

Your North Texas real estate agent can give you referrals, but it is important that you are personally comfortable with the company and the mortgage-lending professional that will be working with you.  Buying is a big commitment for most folks and stirs up plenty of emotion.  You want to work with someone who will facilitate a smooth transaction.  In addition, it is important to know exactly what they expect of you and what paperwork and documentation will be required.

Looking at the companies out there, you’ll find a wide range.  Some are very large, efficient, and well-advertised, but you’ll still need to look beyond the cover.  Some people prefer the personalized relationship and customer service that is characteristic of a smaller company.

After finding out how big the company is, ask how long they’ve been in business.  A company with longevity will have more references for you to check.  The Better Business Bureau may also have information such as consumer complaints.  If a company endures time, chances are they will have a pretty solid reputation.

Ask if the company is a mortgage banker or broker.  The difference is that a mortgage banker loans its own money to a homebuyer for a home loan.  Many of them will retain the loan and service it for the duration of your contract.   However, they are free to sell the loan to a secondary market.  A mortgage banker is considered a direct lender and can give the homebuyer loan approval.

A mortgage broker, in contrast, will shop around for mortgage sources such as the mortgage banker mentioned above.  Many of their source lenders do not deal directly with the public and the broker is the only go between.  Thus, mortgage brokers are called “wholesale lenders.”  Although, mortgage brokers charge fees for their services, they usually have access to many more options than a mortgage banker.

After you narrow down the field of lenders, there are questions to ask the mortgage professionals.  What are the upfront costs?  What is the interest rate?  What points will I have to pay?  What fees are involved?  Is a down payment necessary?  What will be the closing costs?  They should each be able to give you a good-faith estimate for your mortgage expenses.

When you can trust your instincts and knowledge and make a decision, it is time to apply.  Be prepared to open up your private financial affairs to the people who will be handing you hundreds of thousands of dollars.  To process a loan, most companies require a couple of years of federal tax returns, several months of pay stubs, recent bank statements, W-2 forms, and sometimes much more.

Enjoy the journey and you’ll soon be right at home.  Call Dave Warden at (817) 706-3291 or e-mail him at dave@davewarden.net for a tour of great deals in the area.

While banks are tightening up some of the loose credit requirements that caused the mortgage fiasco, people with good credit scores are able to line up for some of the lowest mortgage rates in a generation or two.  If you are in that category, this is your opportunity to pick up some investment properties to supplement your income while the more “risky” buyers take a back seat.  Some banks are actually advertising the number of bankruptcies in their subprime-lending business and looking for people with good credit.  If you have worked hard to establish and maintain good credit, it will pay off in today’s market. 

Costly subprime mortgages, usually those with adjustable interest rates, were sold to borrowers with not-so-perfect credit or people with difficulty being approved for fixed-rate mortgages.  Lenders earned record profits using these tools during the housing boom.  However, as the borrowers default on the loans, these lenders also lose out.  They need a new clientele.  So, in walks the person with good or above average credit and the lender is willing to reduce the interest rate to gain the business.

Listen for opportunities to invest in properties that others have left behind.  The sharp rise in foreclosures has fueled a glut of for-sale properties.  Sellers are consequently lowering their prices in many markets and accepting bids that for many years were not acceptable in a booming market. 

If you are new to investment real estate, we will help you determine which properties within your price range are good candidates for your investment portfolio.  As lifelong residents in the area, we know the neighborhoods and schools, the amenities and the market.  We will tell you of the latest listings, foreclosures, and plain old good deals.  The process is a bit more than our motto would lead you to believe—Click your mouse for your new house!—but we would enjoy introducing you to some really good bargains and guiding you through the sale.  Contact Dave Warden at (817) 706-3291 or e-mail dave@davewarden.net.