Stepping into a mortgage is not always the easiest thing in life to commit to. Cost, value, your position in life, and many other factors all weigh in on whether or not you should make the jump. The following are some things you should be looking at to determine whether or not you are really ready to buy a home.

• You plan to move from the area within the next few years. During the last boom, you could buy and sell in six months to a year in many markets and recoup your buying and selling costs and still have enough cash left over to buy again.That’s no longer the case in a growing number of markets where home prices are inching up, flat or falling.It’s also easier, logistically, to move out of a rental home than a home you own and must sell.
• You are inflexible. Buying is better suited for you when your life is on a steady course. If you are still in your globe-trotting youth and out to see the world, unless you want to also manage house swapping or renting, buy when you’ve settled down.
• You expect a job change or income reduction. Similarly, if you plan to earn enough money to return to college, become a Hollywood celebrity or join the Las Vegas poker circuit, home ownership probably isn’t for you. You can, however, opt to co-own, buy well within your means, say a tiny condo in an affordable community, or use some other affordable home-buying strategy.
• Buying will cost far more than renting. Again, do the math. Some high cost housing markets have gotten so expensive renting makes sense based solely on the mortgage vs. rent difference.

It’s a good time to buy when your finances, planning, goals and lifestyle mesh with the financial responsibilities required for homeownership.

Associated Press

WASHINGTON – The White House said Monday that the giant federal takeover of troubled mortgage giants Fannie Mae and Freddie Mac might have been prevented if Congress had acted on its recommendations for changing the system.

“It is exactly the kind of event we warned about and tried to prevent over the years,” White House press secretary Dana Perino said. “Remember that we have highlighted the systemic risk posed by Fannie Mae and Freddie Mac because of the very large role they play in housing markets and because of their business practices.”

She said that the White House has asked Congress “for years” to establish a strong independent regulator to oversee the institutions.

Perino also highlighted that the takeover will allow time for Congress and the next administration to determine the appropriate future role for the companies. She said their primary mission should be to increase the availibility and affordability of home mortgages.

“Whatever eventual longtime solution is decided for Fannie Mae and Freddie Mac,” Perino said, “it is crucial that there are reforms so they do not pose similar risks to our economy or the financial system again.”

President Bush said he is pleased with the action and believes “it will stabilize the markets.”

“I wouldn’t call it a bailout,” he said in an interview conducted Sunday with Fox News Channel’s Fox & Friends show, and set to air Tuesday. “I’d call it a stabilization.”

Perino said the nation’s “economy will not return to strong job growth until the housing correction is behind us.”

Perino was pressed repeatedly about how Bush — a fiscal conservative — could champion such a historic government takeover and intervention in markets.

“This is not action that we wanted to take. It’s action that we needed to take,” she replied.

Analysts were split on how much the takeover could eventually cost taxpayers although they all agreed the upfront costs will be substantial, possibly hitting $100 billion as the Treasury is called upon to bolster the capital cushions at both institutions. Perino said the administration is moving “to make sure that the taxpayers would be paid back first.”

“The goal is to prevent additional risk to the taxpayers,” she said.

As you consider buying a home and as you begin house hunting, determining how much home you can afford is one of the most important tasks to complete to ensure that you are fully aware of your affordability options.  In this day and age, a pre-qualification is just not sufficient and a pre-approval is the more true assessment of what you can afford.  Before you actually start to house hunt, it is imperative to choose an end lender to pre-approve you.  This pre-approval process is detailed and thorough and after this is completed you will acquire a letter of pre-approval which lets both real estate agents and sellers know that you are a serious shopper who means business.

Furthermore, a pre-qualification is general, basic and is typically conducted over the phone and does not require you submitting financial statements or documents to prove your financial strength.  You are asked to provide basic estimates about your income, tax returns, pay checks and your income versus your debts.  With this estimated information the lender will then estimate what your maximum loan amount could be if you were to apply.

Subsequently, a pre-approval is far more involved and a trusted realtor with experience can help you gather all of the appropriate documentation.  The lender will prepare your full file including actual documentation of pay check stubs, tax returns, etc. which will verify your income and assets.  This along with checking your credit,  your lender will then calculate your actual debt to income ratio and give you an exact figure of what the maximum loan amount you can carry.  This of course, is subject to a pending contract, market appraisal, underwriting approval and so on…

A great real estate professional should be able to guide and direct you toward this process smoothly and effortlessly.  They should also have extensive knowledge and whatever they don’t know they should aggressively pursue the answers for you.  Typically, the best agents have a circle of trusted industry professionals that they can refer you to, in the effort to provide you with the best resources to make your best move.

So, if you want to get the best deal around town, these top 12 questions may prove to be very informative to you during this process and may help you secure the best loan program out there for your circumstances.

1. What loan programs do you offer and which one is best for me?
2. How long will the pre-approval process take
3. What documents will you require of me to secure my loan as quickly and as painlessly as possible?
4. Are you charging me loan origination points?
5. May I have a good faith estimate highlighting every potential line item I may see on the closing statement?
6. What is your policy on locking rates, and will you honor a lower rate if the rates drop during the application process or lock-in period?
7. Is there a pre-payment penalty on my loan?
8. Is my loan a conventional fixed rate or an adjustable rate?
9. Is there mortgage insurance on my loan?
10. How much down payment will I be required to bring to closing and what is my loan to value ratio?
11. Are you charging me an application fee?
12. When will you collect the appraisal fee?

Rent-to-own options are becoming popular again after falling out of favor during the last couple of decades when mortgages were easy to get.

The advantages of rent-to-own to buyers include a way around poor credit, an opportunity to rebuild credit worthiness and a way to try out homeownership without making a costly commitment.

For sellers, it offers cash flow from properties that might otherwise just be sitting there.

In some parts of the country, like Florida, rent-to-own arrangements are fairly commonplace, but in other parts of the country developers are only beginning to experiment with this form of purchase.

In the Boston area, Economic Development Financing Corp. (EDFC) and Trinity Financial are two affordable-home developers that have introduced experimental rent-to-own programs. Eric Gedstad, spokesman for MassHousing, a state agency that finances housing construction, says his agency is supportive.

“As the lender, we are gratified that the developer has cash coming in. It makes sense for potential homeowners. The more time that goes by the better the opportunity for someone to repair his credit.”

Source: Boston Globe, Robert Preer (08/31/2008)

Looking to sell your home? Placing well by these guidelines can help you improve your home’s appeal and even help it to sell faster!

1. Curb Appeal
Stand across the street…How does your home look? How does it compare to other homes nearby?

2. Comparative Value
How does your home’s value compare to the others on the market today?

3. Challenges
What obstacles does your home have that may influence the sale of your home?

4. Condition
Newer? Older? Updated? Outdated?

5. Charm
Is there warmth, character & decor that appeals to the masses?