According to Zimmer, most of the time and cost of repainting is spent on the walls. Yet, on most homes, the walls are basically a canvas against which the more interesting architectural elements are showcased: the doors, shutters, accents and trim. That is where the eye goes when looking at a home. It also is where you may want to invest your precious remodeling dollars, assuming that your whole house isn’t screaming for a paint job.

To make the most of your efforts, take time to think through your home beautification project. Zimmer suggests that you walk around your neighborhood, see which color combinations you like on homes similar to yours, and note how others have used color to highlight their home’s best features.

“Then, look at your own home from the curb or across the street. Identify the elements that are most interesting—maybe you have an unusual front door or entryway, or maybe some of the ‘fretwork’ or trim is especially ornate. Painting those areas will provide the most bang for your buck in terms of aesthetics,” says Zimmer.

Next, says Zimmer, make a visit to your local paint retailer or decorating center and select color cards that resemble the hues you liked on your neighbors’ homes, or that you find especially appealing. When you get the cards home, envision those paint colors on your home’s special features.

To draw more attention to certain architectural elements, you might want to paint them in a bold color or one that contrasts with your walls. On the other hand, painting your doors, accents and trim in a tint or shade that is muted or complementary to your walls may give your home a more subtle, dignified look. Either way, a fresh coat of paint on just a few areas will add plenty of style for a modest investment.

Even if you are painting only a few of your home’s exterior features, according to Zimmer, you should still follow four basic rules to get the best results:

Rule #1: Take time to properly prepare the surface. Before doing any painting, make sure the surface is free of dirt and “chalk.” Since you won’t be painting the whole house, you can simply scrub the surfaces by hand using plain soap and water, then rinse thoroughly. Next, remove any loose, flaking or peeling paint by scraping, sanding or wire-brushing. Finally, brush off the dust and get ready to paint.

Rule #2: Use top quality exterior paint. If there is one rule that you don’t want to violate, this is it. For almost all exterior paint projects, the best paint to use is a top quality 100% acrylic latex paint. It may cost a little more, but this type of paint has superior adhesion, so it will grip onto the surface tenaciously—that, in turn, will help prevent blistering, flaking and peeling in the future. And since 100% acrylic latex paint is also flexible, it will help prevent paint failures in a second way—by expanding and contracting with the surface below when outside temperatures rise and fall.

Rule #3: Use high quality brushes and tools. Painting with high quality tools will make it easier to apply a thicker, more uniform coat of paint to produce a better-looking paint job. Brushes should be springy and well-balanced. When working with latex paints, be sure that your brushes and rollers are made of synthetic materials, as these will tend to hold their shape regardless of the amount of water they are exposed to.

Rule #4: Paint in the right weather conditions. Doing your painting in moderate conditions will help the paint form a tough, protective film that will keep your architectural elements looking freshly painted for years to come. Ideally, you should paint on a day that is not too windy, when the temperature is between 70 and 85 degrees. It is also best to avoid painting surfaces when the sun is beating down on them: surface temperatures can be up to 20 degrees hotter than air temps, and that could adversely affect the paint’s film formation.

Today’s challenging economy demands that homeowners be smart and resourceful when it comes to remodeling. If you want to give your home a fresh new look without blowing your budget, think about doing selective painting of your home’s special features. It’s a great way to go.

For more information, visit www.paintquality.com.

Source: RISMedia

“If I couldn’t remodel as many client kitchens as usual, I decided to remodel my own showroom. That way, I’d be ready to show the latest trends and the most exciting new products when this down period ends,” said Joan DesCombes, president of Architectural Artworks in Winter Park, Fla.

The result is a showroom fitted with the latest looks and innovations in cabinetry, counter tops and appliances from upscale lines such as SieMatic, Sub-Zero, Wolf and Miele. Add state-of-the-art lighting and electronics, and you have the essential elements for the 21st-century dream kitchen.

Of course, not every budget can afford those high-end brands. But, as with fashion and automobiles, the top-of-the-line products set the trends. The styles, materials, colors and technical advances seen in luxury showrooms today inspire the more-affordable versions that show up in the big-box stores tomorrow.

Most strikingly, Descombes’ model kitchens don’t look like typical, traditional kitchens. Appliances are fully integrated into the cabinetry. You see no telltale dishwasher dials and switches, no refrigerator door handles and ice-dispensers.

Our fridges and ovens are designed to look like the freestanding cabinets or sideboards. Even the sophisticated finishes and colors on cabinetry seem more like those you’d find in an elegant living room than the kitchen.

That’s because the kitchen has become a kind of surrogate living room in today’s homes, said DesCombes. It’s where families cook, eat, relax and entertain. And in today’s open-plan home designs, homeowners prefer kitchens that blend with adjacent spaces—living and dining areas, bars and patios.

“We spend a lot of time in the kitchen,” said Judy Yarmuth of Winter Park, Fla., whose kitchen was recently renovated by the Architectural Artworks team. “It’s the center of the house. We have a lot of dinner parties. While I’m cooking, it’s the place to be.”

The entire kitchen was designed around the refrigerator, she said. But hers is no ordinary icebox. Designed to look like a classic Chinese wedding cabinet with a walnut finish, it is typical of the freestanding pieces likely to become popular in coming seasons.

“It’s stunningly beautiful and different,” said Yarmuth. Together with a backsplash of tan/gold Jerusalem stone behind the range and a massive slab of dark wenge wood set into the stone-composite island, the refrigerator cabinet warms up the otherwise white-on-white kitchen “and makes it just yummy.”

Of course, a dream kitchen doesn’t just look beautiful. “It has to function for each individual client,” said DesCombes. “I need to know all about their lifestyle. Are they great cooks, don’t cook, use caterers? Do they have pets and where do they keep the dog food?”

When she redesigned the kitchen in the Melbourne Beach, Fla., house of Charlie and Carol Draper, she replaced the enclosed, traditional design with an open, low-maintenance space. She also installed horizontal-grain cabinets with stainless-steel channels in lieu of hardware, which draw the eye across the room to the panoramic ocean views.

“It’s an incredibly workable kitchen,” said Carol Draper. “Joan moved the island a little. She got rid of some cabinets so the eating area was no longer separate. Now the whole thing just flows. When you’re cooking, it doesn’t even seem like work.”

Kitchen Design Trends

Counter tops: Stainless steel, antiqued marble, lava stone, wood, concrete, mosaics and flamed granite with a textured, matte finish.

Cabinetry: Fewer overhead cabinets. Lift-up or sliding doors, self-closing drawers, glass-fronted cabinets and glass shelving, tracks inside doors for attaching storage accessories, pantries with multiple storage options. Fresh finishes, from smooth, high-gloss and matte lacquer, to textured, horizontal-grain laminates.

Appliances: Free-standing accent pieces and fully-integrated designs that blend with cabinets. Fridges with more crisper space, less freezer space; combination gas/electric ranges; designer range hoods; super-quiet dishwashers; specialty sink faucets; luxury items such as warmer drawers for coffee mugs.

Lighting: Combinations of soft incandescent, bright halogen and cool, energy-efficient LED bulbs.

Colors: Warm neutrals such as walnut, slate, sand, celadon and magnolia.

Architectural elements: Wall niches and bump-outs for housing coffee machines, juicers, dinnerware, herbs, spices and collectibles.

(c) 2010, The Orlando Sentinel (Fla.).

Distributed by McClatchy-Tribune Information Services.

Source: RISMedia

-Your credit score is technically a statistical method of assessing your ability and likelihood to pay back your debt (creditworthiness).

-Credit scores are based on several different factors, including your payment history, amount of outstanding debt, length of credit history, use of new credit and types of credit used.

-Credit scores are primarily based on credit report information, which is typically sourced from credit bureaus.

-Credit scores often come from any of the three largest credit bureaus in the U.S. (Experian, Equifax and TransUnion).

-Credit scores range between 300 and 990, depending on the scoring system and algorithms used (i.e., FICO, NextGen, CE Score and VantageScore).

Before there were credit scores, human judgment was the primary factor used to evaluate a borrower’s credit worthiness and/or risk. This process was very subjective and created a lot of variability in the results. Many lenders spent an enormous amount of resources training employees on how to observe consumer credit behavior as the basis for judging risk when lending money. Not only was this a slow process, but due to human error, it was also inconsistent and unreliable.

Lending institutions have created and used credit scoring systems in various forms for around 50 years. However, it was not until the 1980s that scores were somewhat standardized using a point system that scored the primary variables found on an individual’s credit record. This newer system helped to eliminate much of the subjectivity and variability that had existed with other attempts at standardization. However, this process was still connected to the spontaneous measurements of the consumer’s credit report and did not consider the actual payment behaviors of a consumer.

Credit scoring took a major step forward when statistical models began using combinations of credit data. These next generation computer “predictability” models were designed to include payment information from thousands of consumers and were calculated based on a complex mathematical algorithm that generates a credit score the moment a report is ordered. There are literally trillions of score combinations used in the calculations. When combined with computer applications, scoring models have made the process of granting credit extremely efficient and much more objective. Although far from perfect, these models help facilitate commerce by expediting consumers’ ability to get the credit they need in a far more efficient and effective manner than the systems previously used.

As for your answers above, if you checked all the boxes, you were right!

Jeff Mandel is president and Marlin Brandt is COO of ApprovalGUARD.

For more information, visit www.ApprovalGUARD.com.

Source: RISMedia

Harder to qualify for a mortgage
“The new law dictates certain guidelines that lenders must follow when making loans,” Nicholas said. “Some of these guidelines are simply a copy of the current situation. However, now that the guidelines are built into law, lenders will find it even more difficult to loosen their guidelines once the economy and housing market improves.” For example, consider a business owner with a very high 750 credit score, plenty of equity in their home, no history of late payments, and plenty of cash in the bank. If this responsible homeowner experienced a loss in their business last year, they may be prevented from qualifying for a home mortgage under the new law because of the temporary decline in income from their business. The new law requires lenders to document a borrower’s income, but it does not specifically state the terms under which loans can be made. “Regulators may address this ambiguity when writing the regulations implementing the law,” Nicholas said. “However, if they don’t, many lenders will be tempted to tighten their guidelines even further in order to err on the side of caution and stay in compliance with the new law.”

Higher mortgage rates
“There are two sections of the law that will cause mortgage rates to increase in the future,” Nicholas said. “The new law requires lenders to keep a 5% stake in the mortgages they originate unless the loans meet a certain criteria. This means that lenders won’t be able to offload some of the higher risk associated with these loans, and interest rates on these types of loans will go up.” For example, homeowners who have had financial or credit challenges due to divorce or bankruptcy, business owners with fluctuating income, and other homeowners and buyers who fall “outside the box” may need to pay higher rates on their home loans in the future. “Also, the future of Fannie Mae and Freddie Mac remains uncertain,” Nicholas said. “The market doesn’t like uncertainty, and mortgage rates could go a lot higher in the future depending on when and how the issue of Fannie and Freddie is resolved.”

“To be clear, there are a few positive elements to the bill,” Nicholas said. “These include consumer protections involving pre-payment penalties and loans originated in states that have laws that prohibit lenders from pursuing judgments against homeowners who owe more than the value of their homes. However, the main takeaway for homeowners and buyers is that mortgage rates are currently very low, and lending guidelines are not as bad as they could be once the new law goes into effect. This means that if you can qualify for a mortgage now, you should do so, and not gamble your homeownership goals on the future impact of the new law.”

For more information, visit www.cmpsinstitute.org.

Source: RISMedia

Today, banks are making sure they don’t make the same mistakes again, so loan underwriting standards have become more stringent than ever before.

According to a recent Federal Reserve survey, it was found that about 75% of the banks surveyed indicated they had tightened their lending standards for prime, subprime and commercial mortgages. That was up from about 60% in the previous survey. With this sharp increase in lending standards, borrowers are being turned down for real estate loans at an alarming rate.

Here are the top seven reasons banks are denying home loan requests:
1. Poor credit: The borrower may have a heavy down payment or excellent equity built-up in their house, but if their credit score is under a certain threshold, obtaining a new loan or refinance from a traditional bank is challenging. Even FHA (Federal Housing Administration) loans, which have traditionally catered to borrowers with lower FICO scores, have an average borrower credit score of 693, according to CNN Money, which is above the national average.

2. Insufficient liquidity: If the borrower doesn’t have a heavy down payment (20%-30% for most banks) and strong excess liquidity, banks don’t want to take the risk on funding their loan.

3. Lack of income: The borrower doesn’t have consistent proof of income for the last two to five years. Regardless of how good their credit score is or how much equity they have in their home, if they can’t show the bank proof of income, loan approval will be tough. This can be a big hurdle in the loan process, particularly for retired borrowers.

4. Lying on the application: Banks have learned their lesson and are no longer putting up with borrowers stretching the truth on their applications.

5. Debt: Borrower has excessive debt and their debt-to-income ratio exceeds the bank’s guidelines.

6. Unemployment: Most lenders will like to see at least two years of stable work to issue loan approval.

7. Self employment: Lenders are looking at self-employed applicants with a lot more scrutiny these days, making it very tough for these borrowers to get approved.

Obviously some of these newly structured standards are for the betterment of the industry, and our overall economy, but at the same time, home buyers across the country are realizing quickly that reputable credit and stable income aren’t always enough in qualifying for a loan through a traditional bank.

This predicament is not only affecting potential home buyers, but also the real estate professionals who represent them. Real estate professionals nationwide have expressed that this has become a challenging part of the transaction.

According to Monique Bryher (http://www.californiarealestatefraudreport.com/), a broker associate at Keller Williams Realty, “Home buyers are definitely having a harder time in being qualified. Several of the loan officers with whom I work have complained that loans that would have been approved 6 months ago are being denied now. What’s interesting is that loan applications in terms of volume are up, lenders are busy processing them, but it’s harder to get them approved and it’s taking longer to close even simple, straight-forward transactions.”

Once the traditional lending route has been exhausted, both Realtors and potential buyers are often times at a loss of what to do as a backup plan. Private lending has been around for many years, but most borrowers and brokers have no idea that it’s even an option.

“With the strict underwriting guidelines banks are governed by these days, private lending is the wave of the future for getting real estate loans funded,” explains Eric Wohl, president of NoteFlo, an online private lending marketplace launching today. NoteFlo’s unique service allows borrowers to post loan funding requests for free, which will be broadcast out to thousands of private lenders that will bid for the opportunity to fund their loan. “Our goal is to make sure borrowers know that they have plenty of other options if their loan application is denied by a traditional bank,” says Wohl.

For more information, visit www.noteflo.com.

Sources: RISMedia

ForSaleByOwner.com presents five overlooked reasons why now is a great time to buy a house.

1. Low mortgage rates serve as an equity shock absorber. When buyers borrow at today’s record-low rates, they start building equity as soon as they close. That means they have a little give to absorb a few ups and downs as the still-recovering housing market gains traction.

2. Houses are in move-in condition. Homeowners have continued to spend on maintenance and repair, according to the Harvard Joint Center on Housing. Homeowners who have been holding back, kept their houses in good shape while they waited. As those houses enter the market, they are in marked contrast to tattered foreclosures.

3. Terrific houses are coming on the market. Foreclosures are finally starting to clear the system—and this is just the opportunity that owners of many desirable properties have been waiting for.

4. Appraisal regulations are finally aligned with market realities. Fannie Mae has adjusted its appraisal guidelines, giving appraisers more flexibility to set values that reflect the current market. This ensures that today’s deals will make it over the finish line.

5. Plenty of programs. Homes are more affordable than they have been for years, but communities have stuck by “workforce housing” programs that encourage middle-class families to buy houses. Buyers who qualify can get a big boost by combining one of these programs with today’s low mortgage rates.

Source: RISMedia

In some neighborhoods and price ranges, sellers are dropping their prices because buyers are harder to find now that the credit has expired. Builders and real estate companies began offering promotions after the tax credit ended that, in many cases, are worth more than the credit.

Interest rates have dropped enough since the credit deadline that, over the life of a loan, a homeowner could easily save more than the value of the credit. “I think some folks possibly could have benefited from waiting until after the tax credit,” said Joe Jackson, a real estate agent with Keller Williams Capital Partners. “It would depend on the price point they were buying in and the market they were looking in.”

Home sales leapt in March and April during the waning weeks of the credit, especially for homes priced at less than $200,000, which appealed to first-time home buyers. Since the credit expired, home contracts and building permits have tapered off, leaving sellers with fewer buyers and, in some cases, little choice but to cut their price.

According to real estate website Trulia.com, which tracks price reductions, 30% of central Ohio homes for sale on May 1 had reduced their asking price—more than in April or March. Buyers hope they can take advantage.

Karen Kosnikowski learned days after the tax credit ended that she would have to leave her Victorian Village apartment June 30 because her landlord wanted the place. Her initial frustration at missing the tax credit changed when she started seeing price declines. “I would say five or 10 times a day, something comes in, and half of those are price drops. Sometimes, they are down several thousand,” Kosnikowski said. “So places I’ve seen before are starting to drop, or others are coming into my price range.”

A home in the Clintonville neighborhood she has toured twice, for example, dropped in May from $185,000 to $167,900. Another Clintonville home on her radar dropped from $179,900 to $167,000 after the credit expired, while a Downtown condo she visited went from $189,900 to $169,500.

“None of these went anywhere during the tax credit,” said her agent, Terry Penrod of Real Living HER. “So Karen can just wait to see how low they go.”

Kathy Shiflet, an agent in the Dublin-Hilliard office of Coldwell Banker King Thompson, has found the same thing. She represents a buyer looking for a two-story home in Hilliard. After the tax credit expired, one of two homes under consideration dropped from $156,900 to $149,900 while the other dropped from $154,900 to $149,900.

The tax credit might have something to do with it, but Shiflet thinks the season is a greater factor. “There have been reductions in prices, but traditionally, prices start to come down in June anyway,” she said, “because everyone wants to move in time for school.”

Those shopping for new homes are finding a different kind of bargain as some builders roll out incentives to keep traffic moving.

After the credit expired, Dominion Homes and Fischer Homes launched promotions for free finished basements and/or other upgrades. Either deal would be worth well above the $8,000 credit. “We expected a drop in traffic after the tax credit expired, and we saw that a little bit,” said Jon Jasper, who manages the Columbus division of Fischer Homes. “We anticipated that, and we had strategized to offer some incentives to bring people back. That promotion we’re offering with the free basement is huge in this market.”

Other builders are offering free appliances, trade-in programs, rebates and “sweat-equity” discounts that allow a homeowner to drop the price by painting, landscaping or otherwise helping to finish their home.

Mike Marshall, an agent with Buyer’s Resource Realty Services, said he represented one buyer who deliberately passed on the tax credit to wait for a better deal on a new home. “They found a new build that was so much better in price with the discounts that they gave up the tax credit,” Marshall said.

Real estate companies are also getting into the act. To compensate for the vanishing tax credit, Coldwell Banker launched its Buyer Bonus Program that awards up to $8,000 back to buyers from participating sellers.

Finally, interest rates have dropped nearly half a point since the end of April, saving buyers thousands of dollars over the life of a loan. Buyers of a $180,000 home who borrowed $173,700 in mid-April at an interest rate of 5.125% would have paid $377,442 over the next 30 years—$15,000 more than they would pay if they borrowed last week at an interest rate of 4.75%.

“I know it’s not money in your pocket right away,” said Barb Wilson, the head of mortgage lending at Newark-based Park National Bank, “but the value of the interest rate today is really better than the tax credit.”

Some real estate experts see the central Ohio housing market now settling into a normal rhythm in the absence of the stimulus, which so far has cost taxpayers $18.7 billion.

“At the end of the day, we don’t believe the tax stimulus will put us any further ahead than we would have been otherwise,” said Jerry White, executive vice president with Coldwell Banker King Thompson.

Copyright (c) 2010, The Columbus Dispatch, Ohio

Source: RISMedia

Question: What does the legislation do for ordinary folk?
Answer: The most significant change is the creation of a Bureau of Consumer Financial Protection, which will be independent but housed in the Federal Reserve, the nation’s central bank. This new bureaucracy will have a single mission: consumer protection for credit products such as mortgages and credit cards. That responsibility had rested with multiple bank regulators, none of whom treated it as a priority.

Q: What does that mean for home buyers?
A: The law includes a number of provisions that restrict predatory lending. The question is how aggressively the new bureau oversees mortgage lending. For example, will it set ironclad limits on so-called “liar loans,” in which there was no income verification for mortgages? Will it ban adjustable-rate mortgages with low teaser rates that allowed borrowers to get into homes they couldn’t afford? The bureau is also expected to force lenders to use clear language about borrowing costs.

Another important change is tough regulation for mortgage brokers. Many borrowers erroneously assumed that these brokers had their best interests at heart, when in fact there was no fiduciary duty to borrowers. Rather, lenders rewarded many brokers for getting borrowers into ill-suited mortgages.

The new law “ends steering payments that put mortgage brokers’ interests out of sync with buyers’ interests,” said Sen. Jeff Merkley, D-Ore. He also authored some of the tough restrictions on what banks can invest in if they’re also investing money on behalf of clients.

The new bureau is expected to be most aggressive on mortgages, after the Fed failed to use the power it’s had since 1994 to rein in reckless mortgage lending.”We can’t have that happen again. We’ve got to be very, very tough and consistent on this point,” said Sen. Jack Reed, D-R.I.

To the ire of consumer advocates, however, the new agency will have only limited powers over auto lending.

Q: Would this legislation have prevented the financial crisis?
A: That’s hard to say for sure, but it certainly would have given regulators the power to break up large failing financial firms, and there would have been transparency about who owes what to whom. The absence of such factors amplified the crisis of September and October 2008.

Q: How does this legislation fix what went wrong?
A: Various federal regulators will sit together on a “systemic risk” council that will police threats to the entire financial system. They’ll also get so-called “resolution authority” that allows them to deconstruct a failing large financial firm in orderly fashion.

During the crisis, bankruptcy was the only option. That would have pitted creditors against shareholders and created panic. The Bush administration orchestrated the fire sale of investment bank Bear Stearns in March 2008, preventing panic. It tried to do the same with Lehman Brothers in September 2008, but when that failed, Lehman went bankrupt.

The ensuing panic nearly caused the collapse of global finance. That was prevented only by a massive government bailout program that was deeply unpopular with voters, and by the Federal Reserve’s direct intervention in financial markets.

Those dark days occurred in an environment of little transparency about complex financial instruments called “derivatives.” Investors, regulators and even CEOs of major financial firms were in the dark about some of these instruments. Absent clear information, everyone ran scared.

Q: We hear about transparency all the time. Why does it matter?
A: The lack of information about complex bets made on the probability of bond defaults was one reason the Federal Reserve stepped in and took majority ownership in insurance giant American International Group (AIG). Trillions of dollars’ worth of private two-way bets were occurring outside regulators’ view, and AIG was the biggest player. Today, taxpayers could still be on the hook for about $162.5 billion, partly due to AIG’s involvement in credit-default swaps.

Under the new law, however, deposit-taking institutions will be forbidden from significant involvement in the market for these swaps, which are bets on the chance of a bond default. Most derivatives transactions will have to occur on an exchange or central clearinghouse. There’ll be real-time information about any given trade and, more broadly, about the swaps market—data that didn’t exist when the meltdown hit in 2008.

Greed or malfeasance won’t disappear from Wall Street, but regulators and investors will have more information than ever before to combat it.

Q: How does the legislation deal with Fannie Mae and Freddie Mac?
A: The Obama administration and congressional Democrats opted to leave Fannie and Freddie out of the bill, ostensibly to address them in separate legislation once the housing market recovers.

Fannie and Freddie buy mortgages originated by banks, then bundle them for sale to investors as bonds. From 2000-2006, Wall Street banks jumped aggressively into this business and out-competed Fannie and Freddie. In 2007, these Wall Street bonds backed by pools of U.S. mortgages began blowing up, and on came the financial meltdown.

Right now, Fannie and Freddie are the only mortgage-bond game in town. The private sector’s secondary market, where Wall Street banks passed on their mortgages, is frozen. When this market revives, banks and other mortgage originators will have to keep a portion of what they generate on their own balance sheets to ensure they have capital at risk. This wasn’t required during the run-up to the crisis. 

Q: Will the bill prevent financial crises?
A: Probably not. The legislation mostly fights the previous crisis, not the next one, and Wall Street always finds innovative new ways to make markets spin. Regulators are empowered with new authority to police for risk. Banks will be required to have more cash on hand to cover losses. This will limit their risk-taking capabilities, and the authorities can order big financial firms to get smaller or face government intervention.

Financial markets are highly complex and ever-innovating. A hard lesson of the financial crisis is that markets are profoundly interconnected, and in unexpected ways.

When Lehman Brothers filed for bankruptcy in September 2008, an unpleasant surprise followed days later.

Investors fled money market funds that pay 2 or 3% interest. To pay that interest, the funds take deposits or contributions and invest them in short-term debt issued by corporations called commercial paper. This sort of activity was always viewed as risk free.

However, Lehman was an issuer of commercial paper, and when it went bankrupt, panic ensued in places no one expected. Big manufacturers such as General Electric suddenly couldn’t find buyers for their short-term debt, and investors frowned on putting savings at risk for the small returns offered in the money market funds that days earlier had been considered as safe as cash.

That’s all to say that linkages are often hard to see. The best the legislation can hope to achieve is to provide regulators with an ample tool box, and it appears to do that. It will be up to the regulators to use the tools wisely.

(c) 2010, McClatchy-Tribune Information Services.

Visit the McClatchy Washington Bureau on the World Wide Web at www.mcclatchydc.com.

Source: RISMedia

“We have seen home buyer interest in FHA loans go from practically zero three years ago to upwards of 87% today,” said Christopher Gardner, founder and president of FHA Pros, LLC. “Despite this rapid rise in popularity, many buyers still do not fully understand the benefits of these loans, and we believe it’s time to change that.”

1. FHA loans are not only for lower-income borrowers. FHA loans are available to everyone. There is no maximum income restriction associated with FHA loans, but borrowers do need to substantiate income and assets by submitting proper documentation. This requirement ensures that borrowers are well-vetted and truly able to afford their future homes.

2. FHA loans are not only for first-time buyers. Many people believe FHA loans are available only to first-time home buyers, but this is not the case. Whether borrowers are making their first home purchase or their fifth, they can look to FHA loans as a home financing option.

3. FHA loans are not just small loans; in fact, loan amounts can be as high as almost $800,000. The government recently raised the maximum loan amount from its original cap of $362,790 to $793,750 as a way to help stabilize the housing market. The amount a buyer can borrow varies from county to county though. Later this summer, condo buyers interested in FHA loans can visit www.checkfhaapproval.com to instantly identify FHA-approved condo associations and review maximum loan amounts for a given location.

4. FHA loans are not affiliated with the section 8 housing program. While both programs are administered by the U.S. Department of Housing and Urban Development (HUD), FHA loans have nothing to do with low-income subsidized housing. FHA loans are simply mortgages insured by FHA. This insurance provided by the federal government allows lenders to lend more freely by assuring them that they will be repaid in the event of default. Most traditional lenders, including Wells Fargo & Co., JP Morgan Chase and Citigroup are able to provide FHA loans to their customers.

5. FHA loans are often more affordable than conventional loans. While FHA loans typically offer the same interest rates as other loans, borrowers benefit from a much lower down payment of as low as 3.5%.

6. FHA-approved condo developments are more desirable to buyers. With 87% of home buyers indicating that they plan to use FHA loans, condo associations that are not FHA approved are missing out on a significant pool of prospective buyers. Under rules in place since February 2010, an entire condominium development must now apply to HUD and be granted FHA approval before a buyer can purchase a unit in an association with an FHA loan or before an existing unit owner can refinance into an FHA loan.

Due to the general unwillingness of today’s lenders to extend credit with respect to conventional loans, many borrowers find that FHA is their best bet. Lenders don’t mind lending when the federal government (FHA) assures them of repayment.

Homeowners associations (HOAs) should note that although FHA-insured mortgages might be easier to obtain, they are not “risky” loans, due in large part to the strict “full documentation” requirements placed on borrowers. Individual buyers or sellers can initiate the approval process or current owners can encourage their HOA to apply.

7. FHA loans are assumable. In addition to lower down-payment and credit-qualifying requirements as compared to conventional loans, FHA loans are assumable. This means that when a seller with an FHA loan sells his or her property, the loan and its financing terms (interest rate) can be transferred to the new buyer. This unique feature will certainly make a property more valuable in times of rising interest rates.

“Now, more than ever, buyers and sellers need to understand the options available to them when it comes time to buy a home,” continued Gardner. “At FHA Pros we have worked with countless HOAs, attorneys and individuals to easily and efficiently navigate the historically tricky FHA-approval process.”

For more information, visit www.checkfhaapproval.com.

Source: RISMedia

Source: RISMedia