This essentially means the middle of the three  credit scores must be at least a 640.  Over the last two years, the minimum credit scores required by most lenders has slowly increased.  FHA does not have a minimum credit score requirement per se, but lenders have what are known as “overlay guidelines”, which are guidelines that are separate from what FHA requires. 

Essentially this is a move to clamp down on early payment defaults, which cost lenders millions of dollars per year.  Even though FHA insures mortgage loans against default, lenders can still incur a significant amount of losses if the loans default, especially if they default in the first year.

Recently, some data was released showing that 75% of early payment defaults were from borrowers with credit scores between 620 and 639.  Lenders often analyze data from recently funded loans to see which factors are contributing to delinquencies; and not surprisingly, there is almost always a direct correlation between higher defaults and lower credit scores. 

Some banks may still advertise that they allow credit scores below 640 for FHA loans, but they likely will require a significant amount of compensating factors, which are other strong supplimental reasons for approving the loan.  An example of a compensating factor might be a significant amount of cash reserves or significantly low debt-to-income ratios on the part of the borrower.  

In my opinion, lenders will likely move to a minimum credit score of 680 for FHA loans at some point in the near future.  As more and more borrowers default in this tough economy, lenders will continue looking for ways to cut their losses.  Unfortunately, credit score is typically the easiest metric by which to set a benchmark.  I expect this trend to continue until the housing market has truly stabilized, which won’t happen until unemployment begins to change for the better, foreclosures start to dwindle and the glut of home inventory begins to wane.

Article from Realty Times

From my experience as a buyer’s agent, hardwood floors are one of the most popular items that homebuyers are requesting these days.  Will that popularity last?  It’s hard to say, but I suspect it will for some time at least. 

But there are many different types of hardwood floors.  Some are real wood, others are merely vaneer on pressboard.  As with anything, the lifespan is typically determined by the overall quality of the product, how well it is maintained and also how much it is ultimately used. 

Here’s a great article from Realty Times that discusses some of the economic pros and cons to both carpet and hardwoods, and also has some great maintenance tips for hardwood floors. 

Article from Realty Times

Regardless of whether the seller agrees to pay all or part of the buyer’s home warranty,  buyers have the option of paying the full cost themselves.

A home warranty has advantages for both the buyer and seller of a home.  The buyer benefits by having peace of mind that certain systems and appliances in the home will be repaired or replaced if they break down.   And many home warranty companies also offer protection plans for sellers that cover certain items in the home while the property is listed for sale. 

Check out this article from Bankrate.com for some other information about home warranties. 

Article from Bankrate.com

Several factors will determine whether or not it makes sense for a home owner to refinance, MAINLY the break-even-point, or how long it will take the homeowner to save the cost of refinancing.  This is a mistake that I see MANY homeowners make: They roll thousands of dollars into their loan to lower their payment by only a small amount and then sell their home before they have time to recapture the savings. 

Article from Bankrate.com

Although the attorney general does not have the authority to force lenders to halt foreclosures (that would require at least a court order), it remains to be seen if some lenders will voluntarily comply with the order.  If this happens, or if additional action is persued via other means by state officials, there could be some major implications for the DFW real estate market.

The demand letter asks not only for lenders to cease foreclosures, it also asks them to stop the sale of homes that have already been sold at auction and been placed back on the market for sale.  A memo issued by the Texas Association of Realtors yesterday stated that lenders will likely comply with both requests if they choose to comply at all.

It remains to be seen what will happen with this over the coming days and weeks.  There are some major issues with some mortgage servicers’ process and procedures related to foreclosures.  Although many of the procedures in question are not required in states that are non-judicial, other issues may come to light. 

Article from Dallas Morning News

In fact, many home buyers with strong credit were automatically approved as stated income loans, which meant that many home buyers were unaware their loan was approved as stated income, assumed they were approved as full doc loans and will likely expect the same experience the next time they purchase a home and apply for a mortgage.

Not anymore.

Nowadays, most home buyers (yes, EVEN THOSE with STRONG or PERFECT CREDIT) will more than likely be asked to provide a significant amount of documentation in order to be approved for a home loan.  Be prepared for it because that’s how things work now.   Of course, the documentation varies, depending on many factors. 

For most home loan applicants that are not self-employed, the documentation will include, but will not necessarily be limited to, the following: 

• Driver’s license
• Social security card or verification of social security number.
• W-2 forms for the last two years.
• In most cases, the loan officer will ask for full tax returns to make sure there are no self-employed losses or unreimbursed employer-related expenses (these are typically DEDUCTED from income used to qualify).
• Pay stubs for the last 30 days.
• ALL PAGES of bank and financial statements for the last two months or most recent quarter.

Self-employed borrowers, those with unusual circumstances, those receiving gifts or assistance for down payment, as well as those selling their current homes to qualify for the new loan, will likely have to provide some additional documenation as well.  And most lenders will not approve any applicant with disputed items on their credit report.

If you’re planning to apply for a home loan in the near future, it’s a good idea to start saving these items in a place that will allow you to provide them to the lender in a quick and timely manner.  Otherwise, your closing may be delayed, which can potentially cause many other problems, including a potential lawsuit for failing to close on time per the executed contract with the seller.

Article from Bankrate.com

Texas Tenants Advisor

Landlord Tenant Attorney Desk Reference Manual

This article from the LA Times explores some scenarios to see in what cases the new fee structure may benefit some borrowers.

Here are the details:

• Owner-occupant purchases only.  Investors will not receive the 3.5% closing cost credit, nor will their selling agents receive the $1,500 bonus.  Must be a HomePath property
• The closing must occue within 60 days of contract execution.
• The transaction must close on or before December 31, 2010.
• Buyers and their selling agents must request incentives upon offer submission.

Article from Fannie Mae