Pearland Texas Real Estate

Lisa Coleman, a senior mortgage consultant from HomeTrust Mortgage, sent me some information for my clients on how to choose the right mortgage program. The information she gave was so great, that I thought I'd share it with you!

The Race for Equity: Choosing the Right Loan Program

Those who take property ownership seriously often look for options to build equity at a faster pace. An aggressive approach is to select a 15-year loan program over a 30-year mortgage.

A 15-year loan works well for home buyers budgeting time and money, those who are possibly looking forward to a debt-free retirement, or those who plan to upgrade to a larger home within 15 years. But this requires a sincere commitment to making substantially larger monthly payments.

Provided the homeowner can afford the financial commitment of a 15-year loan, they will pay significantly less money in interest simply because the life of the loan is spread over a shorter period of time. This will result in a smaller tax deduction over a shorter period of time. However, they need to be aware that unless they are extremely financially secure, even a minor setback can have a tragic impact on their ability to make mortgage payments on time and in full. The bottom line is that it's probably not a good idea to put all available cash into a mortgage payment and lose any hope of a financial cushion in the event of emergency.

A less vulnerable approach is to consider making principal prepayments on a 30-year loan, or to invest the extra dollars into another type of asset accumulation account. Here the compelling question is, is it better to take the risk of a non-guaranteed investment, or bank on the guaranteed savings on mortgage interest?

Making prepayments on a 30-year loan is often deemed to be the safer route, and the borrower can make the extra payment when they want to, rather than through obligation. If the homeowner has made less than a 20% down payment, principal prepayment offers them the ability to have their loan reviewed by the lender for the purpose of removing any private mortgage insurance payment (PMI) earlier than expected. First, the borrower needs to discuss prepayment procedures with their lender, and take into consideration whether there is any prepayment penalty associated with their financing before initiating prepayments. They should also note that principal prepayment reduces mortgage interest, which is tax deductible. Depending on what their tax bracket is, this may or may not be beneficial to them.

If the extra money is invested in some other vehicle, the earnings will be reduced by taxes (unless the money goes into a tax-exempt fund). The borrower should compare the mortgage rate to the rate of return on another type of investment, and decide if it makes more sense on an after-tax basis to invest the extra money somewhere else and have the ability to liquidate those assets if necessary.

Bi-weekly mortgage plans are another option for building equity at a faster rate, but consumers should be wary of companies that ask for a setup fee and monthly charges. The most important thing to note is that each client has different goals. These are just a few options for building equity.

For more information on different loan programs, please visit Lisa Coleman at www.LCLendingTeam.com or you can reach her at 281-910-8114 or email her.

Many times I come across people who would like to buy a home but are impeded by their credit score.  Unfortunately, this is all to often an occurrence. 

Recently, I interviewed Aaron Faubion, a financial industry expert and president of Allied Credit  Solutions. Allied Credit Solutions specializes specializes in repairing credit scores. Faubion says that there are several things you can do on your own to help repair and improve your credit score. These are great tips and I'm planning on passing this on to all of my clients! I also wanted to include this for my readers. I know I learned a lot and I hope you do too!

Things You Can Do On Your Own To Improve and Maintain Your Credit:

• Keep all balances on credit cards under 35% of their limit: By keeping your balance to limit ratios down this will impact your scores significantly, showing proper utilization of credit.
  
• Instead of closing accounts, keep them open: You want to show they you are maintain your credit and the accounts you keep. Most people will close accounts when you have paid them off. This isn't always the best idea. By keeping accounts open (even though they're paid) will show creditors that you have been extended credit in the past and know how to use the credit you have been given.
  
• Keep the inquiries into your credit down: You don’t want to have your credit looked at all the time. So keep your credit inquiries down. Only apply for what you think you will be approved for. If you have to many inquiries, a creditor wanting to extend you credit may not extend to you that credit due to the fact of the unknown. A creditor looks at this 2 ways. One, being that you have applied for credit and for some reason we denied. The 2nd being that you applied for credit and may have got extended credit, Therefore, the creditor doesn’t want to get you over extended.
  
• Pay all your monthly obligations ON TIME: The number one thing that gets people into trouble is the mind thought " oh, if I'm late only one time it won't hurt my credit that bad." THIS IS ABSOLUTELY FALSE. 1 single late pay can seriously hurt your credit score. One late payment can hurt someone's score by over 75 points.
  
• Don’t pay off all of your debt at one time: Creditors don’t like this and your credit score doesn’t either. Paying all of your debt off at once, kind of shocks the system per say
  
• Pay off your accounts over a period of time (usually 4-6 months). When you pay off your account / or accounts all at once, the credit scoring system doesn’t know what happened to all of the debt. The scoring system doesn’t know if the debt was replaced by new debt and just not reporting to the bureaus yet or if the debt was transferred to a current outstanding debt, etc. So what will happen is the credit score will drop drastically, for a few months in order to see where if at all the debt went.

If you have been looking for another reason to buy a home, you have one now! Mortgage rates in Pearland are now at an all-time record low: 4.19%! This number surpasses the previous record low of 4.49%.

According to the Wall Street Journal, the 30- and 15-year fixed-rate mortgages and the five-year adjustable-rate all sit at their record lows, with Freddie tracking the 30-year since 1971, the 15-year since 1991 and the five-year since 2005. Freddie said that using data from the Federal Housing Administration, the last time the 30-year was this low was April 1951.

This is outstanding news for those wishing to buy or a home in Pearland! I currently have several great homes listed for sale in Pearland.  

Looking for a 4 bedroom, 3.5 bath with a pool in the Silverlake Subdivision? Check out 2507 Princeton Drive, Pearland Texas. 

Or are you looking for a home in Pearland with acreage? Check out 1603 Willits Dr., Pearland, Texas. 

I have several home for sale in Pearland to fit almost any budget. To view a complete list of my MLS listings, go to www.pearlandhometeam.com.

New Refinancing Opportunities For Homeowners

I just read a great article by AOL contributor, Lita Epstein on the new refinancing opportunities for homeowners who are currently in negative equity in their house.  I did some research and this news is very good!

A letter put out by the U.S. Department of Housing and Urban Development (HUD) on August 6, 2010 states that they are making enhancements to the Making Home Affordable Program (MHA) and the Federal Housing Administration (FHA) refinance program that "will give a greater number of responsible borrowers an opportunity to remain in their homes." 

Essentially, these changes will allow qualified borrowers who are current with their mortgage company the opportunity to refinance into a more affordable FHA loan provided that the lender or investor writes off the unpaid balance of the original first lien mortgage by 10%.

Below are the Guidelines for Elibility set forth by the Department of Housing and Urban Development:

1. The homeowner must be in a negative equity position;
2. The homeowner must be current on the mortgage to be refinanced;
   
3. The homeowner must occupy the subject property (1-4 units) as your primary residence;
   
4. The homeowner must qualify for the new loan under standard FHA underwriting and your FICO score must be greater than or equal to 500;
   
5. The existing loan must not be a FHA-insured loan;
   
6. The existing first lien holder must write off at least 10 percent of the unpaid principal balance; 
7. The refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent; 
8. Non-extinguished existing subordinate mortgages must be re-subordinated and the new loan may not have combined loan-to-value ratio greater than 115 percent;
   
9. For loans that receive a "refer" risk calculations from TOTAL Mortgage Scorecard (TOTAL) and/or are manually underwritten, the homeowners total monthly mortgage payment, including the first and any subordinate mortgage(s), cannot be greater than 31 percent of gross monthly income and total debt, including all recurring debts, cannot be greater than 50 percent of gross monthly income;
   
10. FHA mortgagees are not permitted to use premium pricing to pay off existing debt obligations to qualify the borrower for the new loan; 
11. FHA mortgagees are not permitted to make mortgage payments on behalf of the borrowers or otherwise bring the existing loan current to make it eligible for FHA insurance
    
12. the existing loan to be refinanced may not have been brought current by the existing first lien holder, except through an acceptable permanent loan modification.

The FHA encourages borrowers that if they have any questions regarding eligibility requirements to contact the FHA Resource Center at 1-800-CALLFHA (1-800-225-5342).

This federal program can positively help millions of American homeowners nationwide and I encourage you to look into it if you are in a negative equity situation!