Property Condition When Selling A Property

When you plan on selling a property, it’s important to remember that most buyers will have to take out a mortgage to buy your property.  When a mortgage company or bank looks to help finance a property for a buyer, an appraisal will be necessary to show condition of the property.  If there are any condition problems that the lender doesn’t allow, this can delay the closing of your property or kill the deal.

Make sure you understand what major items a lender will look for in the condition of a property, when a buyer is taking out a mortgage.  Here is a good list of items that you should review, if you plan on selling your property anytime soon.

 

Major Items to Check on Your Property

  • Roof – Lenders are looking for leaks and major damage or major deterioration.
  • Windows/Doors – Make sure they are not broken and are working properly.
  • Basement – Make sure there are no signs of major cracks or movement in the walls.  Foundation issues can really cause problems when it comes time to sell your property.
  • Walls – Make sure the walls don’t have large holes, signs of water damage or unfinished.
  • Repairs – Any repairs or improvement projects must be complete.  You don’t necessarily have to have the trim installed, but all fixtures need to be installed.
  • Heating – This must be in working condition.  It doesn’t have to be new, but it must work.
  • Water – This must be working and flow through the house, without any leaks.
  • Hazardous Conditions – Make sure some items like, methane gas, lead paint, radon gas, radioactive material, landfill, toxic materials, etc. are not in or on the property.  This can cause big concerns with the lender.

It’s always recommended that you have your home inspected by a licensed home inspector.  This way, you will have peace of mind that there will be little to no problems with the condition of your property when the buyer uses a lender to buy it.

FHA Mortgage Program: Popular Among First Time Home Buyers

The FHA mortgage program has become a very popular mortgage program with first time home buyers.  Home buyers do have many options with mortgage programs when looking to get pre-approved, but the FHA program has become the most popular.

There are many reasons why the FHA program has become very popular among first time home buyers.  Here are some of the great benefits why the FHA mortgage program is great for home buyers.

Credit Score

The minimum credit score allowed with most lenders is a middle score of 640.  It’s very common that home buyers don’t realize they have a good enough credit score to qualify for the FHA mortgage program.  The lower credit score that is allowed opens up the opportunity for many first time home buyers to qualify for a mortgage.

Down Payment

The minimum down payment is only 3.5% of the purchase price.  The down payment can even be gifted funds from a family member.  Many home buyers didn’t know the down payment can be gifted.  Home buyers can even use the funds from a 401k retirement account.

Interest Rates

The interest rates for the FHA mortgage program are very low.  We have been seeing the FHA interest rates lower than most conventional mortgage rates, when comparing 30 year fixed rates.  These lower interest rates keeps the total payment lower for home buyers, which allows them to afford more of a home.

Debt to Income Ratio

The debt to income ratio allowed is higher with the FHA program versus a conventional program.  The debt to income ratio is the total monthly payments, including the new mortgage payment, divided over the total gross monthly income.

Example:  The new mortgage payment total is $1500, plus an auto loan payment of $300, plus a credit card payment of $50, gives you a total monthly debt of $1850.  The total monthly income, before taxes, is $5000.  1850/500 (total debt/total income) = 37%.

The FHA program lenders allow up to 55% debt to income ratio percentage, where a conventional mortgage only allows up to 45%.

These benefits have made the FHA mortgage program the most popular program among first time home buyers.

HARP 2.0 Program – Underwater Homeoweners In Wisconisn

This updated refinance program, HARP 2.0, has been helping many underwater homeowners in Wisconsin.  Many homeowners are reading different guidelines from different lenders with this program.  This will happen, because each lender may create their own guidelines for HARP 2.0.

Here are some basic guidelines to help you understand what is allowed with HARP 2.0.  You always want to check with the lender you plan on working with first, in order to make sure your situation will qualify.

Guidelines To Follow

  • Fannie or Freddie Backed - Your mortgage needs to be backed by Fannie Mae or Freddie Mac in order to qualify.  Also, your mortgage had to be received by Fannie Mae or Freddie Mac before June 1, 2009.  Here are the website’s to look up your mortgage with Fannie and Freddie:
  • No LTV Limit - You can have little to no equity or be completely underwater on your mortgage.  There is no cap to how far underwater you are.  Some big banks have a cap to their LTV (loan to value), so you should check with a local mortgage company to find those that do not have a cap.  A Wisconsin lender that has no cap to the LTV for HARP 2.0 is Joshua Bucio.  Read more at http://www.milwaukeeharprefinance.com
  • No Appraisal - Just about all of the HARP approvals are receiving a waiver on the appraisal report.  This means you will not be required to appraise the home.  This will help reduce your costs and streamline the process of your refinance.
  • Eligible Properties - Your primary residence, second homes and investment properties all qualify for the HARP 2.0 program.  Your property can even be a multi-unit, up to 4 units total.
  • Second Mortgage - If you have a second mortgage or home equity line of credit, you can still refinance with the HARP program.  You cannot payoff the second mortgage with the refinance, so you have to keep it open.  This program is only for first mortgages.
  • Mortgage Insurance - If you currently have a mortgage insurance (aka PMI) payment, as part of your total payment, that’s ok.  The mortgage insurance on your current mortgage will be transferred to your new mortgage loan.  This will not hold you back from qualifying for HARP 2.0.

Please keep in mind many of the big banks have many more strict guidelines than most local mortgage companies.  It may not be your best choice to use a big bank.  Take the time to contact a local mortgage company that helps with the HARP refinance program.

Benefits Of The USDA Rural Housing Mortgage Program

The USDA (United States Department of Agriculture) mortgage program was created for low income families looking to buy a home in rural areas. This program has become more and more popular in recent years, because of the tightening of lender guidelines with conventional mortgage loans.

There are many benefits of a USDA Rural Housing mortgage loan, but these are the main benefits that makes this program one of the best mortgage loans available.

No Down Payment Required

This mortgage program still allows you to buy a home with no money down. It’s one of the only programs still available that allows 100% financing. This is a great benefit, because you can buy a home with very little money out of pocket. This leaves more money for home improvements and savings for future repairs of anything breaking down in the home.

No PMI Required

Conventional mortgages require a PMI (Private Mortgage Insurance) payment, in addition to the regular mortgage payment, if you don’t have a down payment of at least 20%. The USDA Rural Housing program doesn’t require PMI, even if you finance 100% of the purchase price.  This is a huge benefit, since it keeps your mortgage payment low, while allowing you to qualify for a larger mortgage loan.  No one wants to pay PMI, because it’s not applied to the principal balance or the interest you pay over the life of the mortgage loan.

Low Interest Rates

Even though you don’t have to put any money down with USDA Rural Housing mortgage loans, you will still receive a lower interest rate. Depending on your situation, typically, the interest rates are not much more than 0.5% higher than conventional mortgage loans. This is a great benefit in addition to not having to come up with a down payment and not having to pay PMI. A lower interest rate will save you tens of thousands in interest payments over the life of the mortgage term.

These 3 benefits alone will put you in a better position to buy an affordable home.

Learn more about Wisconsin Home Loans and other mortgage programs like the Rural Housing program.