Make your­self home­buy­ing-ready

Home - Santa Fe Real Estate Guide - - NEWSFROMSFAR - PACO AR­GUELLO

Dur­ing the Great Re­ces­sion, the Na­tion­alAs­so­ci­a­tion of Real­tors found that nearly 9.3 mil­lion home­own­ers un­der­went a fore­clo­sure, deed-in-lieu of fore­clo­sure, or a short sale. Af­ter sit­ting out of the mar­ket for sev­eral years to re­build their credit, these for­mer home­own­ers are slowly com­ing back to the mar­ket look­ing for another chance at home­own­er­ship. In fact, nearly a mil­lion for­mer own­ers have likely al­ready pur­chased a home and another 1.5 mil­lion are likely to pur­chase over the next five years.

In spite of the dif­fi­cul­ties and hard­ships they faced, these re­turn buy­ers still as­pire to home­own­er­ship. And home­own­er­ship has many so­cial ben­e­fits, such as fos­ter­ing strong com­mu­ni­ties. The ben­e­fits of own­ing a home are still ob­vi­ous to these re­turn buy­ers. They still see home­own­er­ship as one of the best ways to build eq­uity over the long term.

Here are some tips for re­turn buy­ers hop­ing to once again be­come home­own­ers:

Make sure your credit is clean. All buy­ers should care­fully eval­u­ate their fi­nances be­fore be­gin­ning the search process. A home­owner who has ex­pe­ri­enced a fore­clo­sure on a con­ven­tional loan can ex­pect to be neg­a­tively im­pacted for at least seven years if the fu­ture loan will be pur­chased by Fan­nie Mae (the Fed­eral Na­tional Mort­gage As­so­ci­a­tion) and five years if pur­chased by Fred­die Mac (Fed­eral Home Loan Mort­gage Cor­po­ra­tion). The im­pact is three years for a fore­clo­sure on a Fed­eral Hous­ing Ad­min­is­tra­tion loan if the con­sumer wants to ob­tain sub­se­quent fi­nanc­ing through FHA, though that­wait can be waived if the bor­rower qual­i­fies for FHA’s Back toWork pro­gram.

The im­pact for an owner in a short sale can vary widely, but it can be a much shorter time­frame if the owner was cur­rent on his or her mort­gage pay­ments and has an oth­er­wise fa­vor­able credit history. Re­turn buy­ers should look at their in­come, sav­ings, and credit re­port, and col­lect doc­u­men­ta­tion of in­come and cash avail­able to pre­pare for the mort­gage ap­pli­ca­tion process. If you are re-en­ter­ing the mar­ket af­ter a fore­clo­sure, it is even more im­por­tant that you have all of your fi­nan­cial ducks in a row.

Get preap­proval foramort­gage. Preap­proval is a writ­ten state­ment from a len­der stat­ing the amount of money you have been ap­proved to take out as a loan. Hav­ing this in­for­ma­tion will help the home-buy­ing ex­pe­ri­ence go much smoother and make you a more at­trac­tive buyer to sellers.

Have a down pay­ment ready. Many re­turn buy­ers pur­chased their first home when lit­tle-to-no down pay­ments were needed. Hav­ing a siz­able down pay­ment is now an im­por­tant part of the home-buy­ing process. An FHA loan re­quires a down pay­ment of at least 3.5 per­cent of the pur­chase price and a con­form­ing loan with­out mort­gage in­sur­ance is a min­i­mum of 20 per­cent of the pur­chase price.

Find a Re­al­tor. Most im­por­tantly, con­tact a Re­al­tor, a mem­ber of the Santa FeAs­so­ci­a­tion of Real­tors. They are the most trusted re­source for real-es­tate in- for­ma­tion and can give re­turn buy­ers the ad­van­tage they need in to­day’s mar­ket.

As the lead­ing ad­vo­cates for home­own­er­ship, Real­tors be­lieve that any­one who is able and will­ing to as­sume the re­spon­si­bil­i­ties of own­ing a home should have the op­por­tu­nity to pur­sue that dream, and re­turn buy­ers are com­ing back to the ta­ble with a thor­ough un­der­stand­ing of the chal­lenges and re­wards of home­own­er­ship.

Paco Ar­guello is chief ex­ec­u­tive of the Santa Fe As­so­ci­a­tion of Real­tors. Con­tact him at 982-8385 or paco@sfar.com.

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