Debbie Brodie’s Chico Real Estate Blog

Now is a great time to buy a house.

With the extension of the $8,000 first time home buyer credit and the addition of a $6500 credit for some move-up home buyers, many people will be out shopping for the best deal of the holiday season.

But you have to be able to qualify for a home loan. Here are some tips.

For mortgages, 620 is the new magic number
Near historic low mortgage rates, favorable home prices, and the federal tax credit for first-time home buyers have contributed to home purchases in the past year.  However, the onset of the credit crisis, new regulations for home appraisals, and more stringent guidelines for purchases and refinances have resulted in confusion for some potential home buyers.

While using a mortgage broker to find the best loan may work for some buyers, it may not always be the best route.  In the past, mortgage brokers could “shop” a loan to multiple lenders to help find the best deal.  However, new practices and procedures under the Home Valuation Code of Conduct (HVCC) have hampered mortgage brokers’ abilities, namely that lenders may no longer accept home appraisals commissioned by brokers.  As a result, consumers may have to pay for new appraisals with each lender, which costs time and money.  However, consumers who are very busy or need guidance may find that working with a mortgage broker is the easiest solution.

Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past.  Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs.  Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage.   However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income.

As for loan type, most real estate professionals agree that a fixed-rate mortgage is the best choice for buyers and refinancers.
To read the full story, please click here.

 If you are thinking of buying a home this year, it has never been more important to speak with a lender NOW.

When a hot deal comes up, the people who are prepared are going to get the deal. Bank owned properties must have pre qualified buyers. Short sale properties need pre qualified buyers.

If it takes you a day or two to get your paperwork to the lender, someone else will most likely get in ahead of you.

There are also many special programs out there, and you need to know the details before you make the offer. The Chico City Subsidy program has plenty of money right now, but you and the house must qualify for the program.

Local lenders will know about everything available to you in Chico and Butte County.

Here is what money magazine has to say:

Best way to find a home loan
During the height of the real estate market, most borrowers who applied for a mortgage received one.  However, in today’s lending environment, consumers should be more cautious about where they apply for a loan and from which Web sites they receive quotes.

 

Borrowers should be cautious about sites that request a Social Security number and address upfront.  The site may pull the consumer’s credit report, which could have a negative impact on their FICO score should they not apply for the mortgage.

 

It’s also important that consumers ensure that all fees are clearly disclosed on a site’s rate quote.  Otherwise they may be surprised when receiving the paperwork from the lender.

 

Borrowers who are unsure of which type of mortgage is best for them and their situation should contact a mortgage broker.  Those in the market for a jumbo loan or financing an investment property may best be served by working with an experienced broker. 

To read the full story, please click here:

Has anyone heard of the "Home Valuation Code of Conduct?" Appraisers have, and some are worried. The code has been revised to put a firewall between the brokers and the appraisers. No more cozy relationships.

After being devastated by problems with unscrupulous lenders and brokers, the Federal Housing Finance Agency, Fannie Mae, Freddie Mac, and the Office of the New York Attorney General released a revised version of the Home Valuation Code of Conduct. The new "Appraisal Code" has an implementation date of May 1, 2009, and it may be downloaded here.    

A local appraiser brought this to my attention and told me that appraisals are already being ordered from appraisal management companies back east, and that many Chico appraisals are being assigned to Sacramento.

From back east, Chico and Sacramento seem like neighbors. But an appraiser ninety miles away has no idea of the street to street values of Chico. As a Realtor, I would not dare try to establish the market value for a Sacramento home. I know better.

Would a Sacramento appraiser know the difference in value between a home on 7th Street. and a home on 10th Street in Chico? Both homes were built in 1925. They are just three blocks apart. Same square footage. But the values are night and day. 7th street holds some of the most expensive homes in Chico, while 10th St. falls on the opposite end of the scale. Where one home’s value is over $300,000, the other is closer to $200,000.

Across town, a newer home with 2200 sq ft is nestled in with homes between 1100 and 1400 sq ft. These are entry level homes on sub-standard streets. Yet an out-of-town appraiser insisted the value be compared with homes of the same size, clear across town in an upscale area. This appraiser missed the value by 30% and cost my client a home.

Any local appraiser would know the true value of these homes, and would never make these mistakes.

I agree that appraisal fraud needs to eradicated. But not at the cost of accuracy. It would be a huge mistake to think that an appraisal can be done on data only, without knowing the nuances of each community. 

For the statement from Fannie Mae, click here.