While Money Blue Book probably didn’t mean this to be funny, I found humor in the post Dating Tips for the Financially Savvy Person (or 6 Signs Your Date is a Financial Dud).  This can easily be paralleled to people also unable to qualify for a mortgage loan.  For example,

If your date seems overly impressed by their own spending, it may be that they are forgetting an important fact: Eventually they have to pay for it all.

As stated, this is what happened in the mortgage crisis of the 2007-2010 (and now) years. People overspent – they could not afford what they bought.  Of course, not all was their fault.  When the job market took a big hit, job loss caused a huge volume of foreclosures as well.

Here’s another… won’t save for a rainy day,

But a little advance planning can go a long way when trying to pay for a wedding, a vacation or your first house. It takes a little discipline and an ability to go against the crowd. If your date thinks keeping a savings account at a bank is uncool, you know they may not be very adept at long term financial planning.

Forget this person!  They’ll lead you to financial hardship if you stick around long enough!

Photo by Andrew Magill via flickr creative commons.

I’m just as guilty as anyone else.  I keep saying the housing market is getting better. Maybe it’s just me getting better at what I do, thereby attracting more clients.  Either way, I already have three closings already under my belt this year (one less than the entire year of 2009).

But what is wonky about today’s market?  From Out of Your Rut.com, we are told 2010 was the worst year ever – is now the time to buy?

…there are nagging problems with housing that can’t be ignored. Consider the following…

Price/interest rate relationship. House prices have fallen significantly in an environment of record low interest rates—below 5% for a 30 year fixed rate loan for much of the past two years. At any other time in history, significant drops in mortgage rates would resuscitate housing in a matter of months. Something’s different this time.

This begs an obvious question: if low rates failed to lift the market, what affect will rising rates have? If we’re betting that rates remain low for the next couple of years, we’re also betting that the economy will remain weak. How will that support housing? This is an apparent conundrum and we’ll have to wait to see how it plays out.

It is a weird weird market we have today.  I now predict that it will take years to work itself out (no longer am I saying we’re at the bottom because while we are, the bottom of this bathtub is deep).

As Out of Your Rut says, if you’re going to buy – buy low, buy less than you can afford, and try to pay off the mortgage early.  You’ll be better for it in the long run.

Rut photo by ted and jen via flickr creative commons.

One of my friends – a fellow agent – called earlier today and told me a story that caused a sleepless night for her.  She is working with a buyer who is establishing a new line of credit via proof of bill payments (no other credit score to speak of yet).

He had one ding on his bill – he was late paying a cable bill because in the move, he didn’t get the bill from his mother in time to meet the payment due date.  And of course the cable company showed that he was late with that one payment.  The lender suggested the real estate agent get some white out and take care of it.

Appalling!

Loan fraud is one of the many reasons this country has been in a foreclosure crisis for the last few years.  But what is loan fraud?  It is when the truth does not prevail on a loan application… perhaps something is “whited out” or income is reported incorrectly.  Maybe a buyer says they will be occupying the house, but their intention is to rent.  This is all loan fraud.

Be truthful on your loan application when you buy a house.  It’ll keep you out of jail.

Photo by amanderson2 via flickr creative commons.

Bank of America blamed bad mortgages for its $1.6 billion loss in the 4th quarter of 2010.  Many of these bad loans became an entree on BoA’s table when it purchased Countrywide Home Loans in 2008.  Had the bad loans not been there, the firm would have earned four cents per share.

Meanwhile pressure is there for Bank of America to step up and buy back previously sold loans according to the Associated Press through Comcast Finance,

Investors say that the bank should take back the bad home loans because they were sold on improper documentation. Besides buying back bad loans, several banks were stung by accusations in the fourth quarter that they failed to properly review documents used in foreclosures. Attorneys general from all 50 states are conducting an investigation.

What does Bank of America’s report mean to the consumer?  Given that losses have slowed, it demonstrates that finances across the board – from corporate level to regular people like you and me – are improving.  More house payments are being made on time.  This is good.

The general public expects homes prices to drop.  Real estate agents expect home prices to drop.  Lenders expect prices to drop.  We know appraisers believe home prices are dropping!  It seems the only people who might not expect it are the sellers.

However, the proof is in the pudding.  A survey completed by Gallup Polls and published by 24/7 Wall Street show that homes could drop between 7- and 10-percent this year.  Further,

The research shows that 67% of Americans feel now is a “good time” to buy a house — similar to the 72% of April 2010 and the 71% of April 2009. The findings, from a Gallup poll conducted Jan. 7-9, 2011, suggest Americans are holding on to perceptions of a buyer’s market despite the challenges of securing financing and observers’ concerns about the potential for a housing “double-dip.”

The article stated that, “Americans like the idea of buying a home, but like is as far as it gets.”  If we can get a surge in consumer confidence, we’ll be on easy-peasy street. Unfortunately with gas prices climbing again, the time is ripe for the double-dip.

Just five years ago, one of my sellers qualified for a short-sale on their home.  The father had undergone a heart replacement (he later died), the mother lost her job.  The loan company was very happy to help them and – in this instance – the family was given $3000 after closing because they left the home in good condition and were very cooperative with the lender.

Today’s short sales are a little different.  Homeowners still have to meet some hardship standards, but how these standards are defined can encompass just about anything.  According to Dave Shepard of Concord, California, even a job relocation can count as a hardship to qualify.  Here are more qualifying factors that could be approved,

If you move in 6 months and stop making the payments, then something will need to be done. The bank will either approve a short sale or foreclose on your property.

You could try to rent the unit out and write a check every month to cover the payments. But, then you would be limping along for years until the market improved and you can sell.

But, what if things get worse? What if a tenant trashes your condo and you can’t afford the repair bill? No one wants to rent a trashed condo.

There can be a multitude of ways to qualify for a short sale, but ultimately it’s up to the lender and how cooperative the home owner is with them.  Read Dave’s post at Active Rain to learn more.

You’d think this is a headline from four or five years ago, wouldn’t you?  Actually I came upon this today – an article written today by an Atlanta real estate agent.

Apparently Wells Fargo is accepting a credit scores as low as 500 with a specific down payment amounts and using FHA loans only.  From North Atlanta Real Estate,

Please note the following particulars as Wells begins to source up and process these transactions:

If 500-579 – MUST HAVE 10% DOWN
If 580-600- MUST HAVE 5% DOWN
NO GIFT FUND OR DPA (Down Payment Assistance) CAN BE USED FOR DOWN PAYMENT
DTI: (Debt to Income Ratio 31/43
Refer – 31/ 36 AND 2 MONTHS PITI RESERVES
ALL LOANS HAVE TO GO TO EXCEPTION DEPARTMENT! And reminder this is for ONLY PURCHASES, no refi’s!

I had heard that Wells Fargo still accepts 600 credit scores in certain situations, but 500 seems really low.  I wonder what the interest rate is on these loans – 8 percent? 8.5 percent?

Interesting…

Happy weekend and MLKing Day Monday!

Photo by Andrew Magill via flickr creative commons.

My credit score has almost reached 800.  It may have wavered a bit because I’ve missed a credit card “pay by” date a couple of times this year … I hate it when I make little mistakes like that can have a huge impact.  The impact would be greater, though, for lower scores.

What is a good credit score?  Previously 600 could get you in a house.  Although still possible, a 600 score is almost impossible to get financing for a house since most lenders have already switched to the 620 minimum.  Today, a score between 650 and 700 is viewed as fairly solid.  According to Everything Finance, holding on to that score should be the major objective of any person whose finances matter.

When you have a good credit score, don’t try to raise it any more.  If you reach a mark of 650 or 700, stop and simply keep your balances below 25% of your credit limit and make your payments on time each month.

It would be extraordinary to live in a crazy house … that is a crazy structure (not just a house full of teenagers).  I would live in a cave – especially during the summer to keep temperatures down.  I would live in a tree-house – especially if the views were gorgeous.

Would you live in a crazy house?  House Logic.com shows several from which you can choose.  For example, a pod house.

I would say no to the Pod House.  What about you?

Photo by Kevin Kennedy via flickr creative common.