FHA Tightens Credit Standards For Home Buyers

There have been a lot of speculation and news reports saying that lenders are easing their credit standards slightly to help home buyers get into a house. While on the surface that may sound great; FHA announced a tightening of a certain standard that has not been invoked in years that can make it more difficult for FHA buyers to obtain a mortgage if they have delinquent accounts with a balance of more than $1000.00 on it. The standard use to be up to the individual lender discretion; but most lenders did not bother if the account was greater than 2 years old or the buyer had a hardship or legitimate explanation for why they were disputing the charges or the charge off or if the balances were minimal.. if the rest of the credit warranted an approval they would still get the loan. Now, the new changes make it very difficult for lenders to do that. They now need to document the approval and the reason as to why. The new rule requires borrowers with loans in collection that add up to at least $1,000 to either pay off the debt, prove they're making payments on the disputed loans or explain why the disputed loan is somehow wrong -- and document their case -- before they can close on a FHA loan. Lenders that are underwriting the FHA loans will get final say on whether the loans go through. If the borrower's explanation of an outstanding debt and supporting documentation satisfy the bank, it can decide to issue the loan --but they run the risk of FHA rejecting it. lenders are going to side on the side of caution when it comes down to it because they do not want to be on the hook for the mortgage with 3.5% down if FHA rejects it. Now, more than ever; you need to look at your credit report and see if there are any old medical charges or charge offs on your account form years ago and work on getting them settled. Because even something as old as 5 to 6 years can hold you up from getting an FHA mortgage now. Dave diCecco Realtor/Broker www.davedicecco.com

Can The Seller Cancel The Contract In North Carolina?

A question was posed to me the other day from one of my sellers whose home is under contract. She wanted to know if we could cancel the contract? She had some reasons for asking the question and thought it did not hurt to ask. Initially i took the listing on as a short sale. but after digging through some legal books and searching the internet I found a loophole that removed one of the liens off the house. Of course after I found this out I consulted an attorney who looked it up and said "WOW you are right" i did not know that law existed. So, now we were no longer doing a short sale. (Though this process took about three months to officially get it cleared up). we revised the contract to put in a due diligence period and a close date that I felt comfortable meeting. We asked the buyer to proceed forward with the loan so we could close on time. It became apparent that the buyer's agent and the buyer felt no urgency with this; since it took days to get updated from them on the process and where they were at. I kept everyone informed of the progress i was making and assured them that we would be meeting the timeline for closing with no issues. Do to the lack of response from the buyer my seller wants to cancel the contract. She asked can she cancel the contract since the buyer seems to be dragging her feet and may not make the close date? Unfortunately, i told her that we have a set close date and we have to honor that date or we would be in breach of contract. Then the buyer has 14 days from that date to close on the house if they show diligence in getting their loan approved. After those 14 days the seller has the right to cancel the contract and keep all the earnest money as liquidated damages. or they can extend the buyer if they so desire. But, she cannot prior to that without good cause cancel a contract on her house.... If you are selling a house be wary of the close date and prepare for the unexpected today. Too many deals I have seen lately are not making the close date because of one issue or another. And the buyer has that 14 day window to proceed forward with if they are showing diligence in getting the loan approved. Dave diCecco Realtor/Broker www.davedicecco.com

New Construction Plus A Buyer's Agent Equals A Happy Buyer

There are a lot of people out there that buy a new home without any representation, except for the one provided by the builder. And that person works for the builder in their sales center. Most of the objection is that I can get the price I want and I do not need a buyer's agent. Or the builder's sales representative is an honest and fair person looking out for my best interest. And my personal favorite is that without a buyer's agent I can get a better price because they do not have to pay the commission to the Agent. All of the above are false... There are multiple reasons to ensure you are protected when you purchase a home. There are questions you do not know to ask. There are negotiating tools an experienced Realtor will use that the builder will not tell you. I just, the other day had a client who referred me to his parents to sell their house. When they told me they were going to build a new home I said where? they said we already picked the lot out and are going to sign the papers tomorrow.... I was able to get them to hold off until i could review the contract and talk to the builder's representative. After a week of bantering back and forth with the builder's representative; we agreed to have the buyer meet with the design studio for options. Now, we got the complete price and package deal we wanted. The options came in substantially higher than my buyer thought. The builder was providing a $15,000 credit but the upgrades cost over $42,000. So, that had to be added back into the price of the house. So, after taking all the numbers and having the buyer contact a third party mortgage professional for payments and pre-approval we knew where they were at a month. I also knew what they wanted to spend a month. Those numbers were $47,000 apart. After weeks of negotiating the builder agreed to a price. it was a little more than the buyer's wanted. However; by having a buyer's agent they saved $34,500 off the price that they would have paid for the house. Or they would have given up options they really wanted in their retirement home. We signed yesterday and put the deposit down on the lot. As we were leaving they were astounded at how more complicated it was to buy a new construction than they thought. Without me they said they might not have bought the house or gotten in over what they were comfortable with... There is a lot a builder will not tell you. We do this every day; but the average homebuyer only buys a home on average once every seven years. So, the moral of this blog is that; if you are buying new construction make sure you have representation. it costs you nothing and can save you thousands of dollars.... Dave dicecco Realtor/Broker www.davedicecco.com