Be On A Budget And Still Go Out With Your Friends

20sYou and your friends may have shared a similar economic situation when you were kids or while you were in college, but now that you are adults, your incomes might diverge widely.  Differences in spending habits can destroy a friendship when they result in wildly different lifestyles or feelings of resentment, but if you approach the money situation with care and you have good friends, you can avoid blowing your paychecks on fancy dinners out or expensive clothes.

  1. Don’t Assume You Can Afford It Too

Just because all your friends recently purchased new luxury cars doesn’t mean you should follow suit. If you’ve always been on similar spending levels in the past, your inclination might be to think that nothing has changed. However, your friend might be earning a bigger paycheck, or be willing to make sacrifices in areas that you aren’t, like living in an inexpensive apartment or giving up vacations, in order to afford his or her new wheels. Of course, for all you know, your friend can’t afford it, either. Most people don’t volunteer information about how much they make. Stick to purchasing decisions you know you can comfortably afford, regardless of what the other people in your life are doing.

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Buying Existing Home vs New Construction

existing home vs constructionBuying a House

Buying a pre-existing home is an attractive option for many people because — in most cases — you can move into the home soon after closing.

Benefits of Buying a House

Some additional benefits of buying a home that already exists include:

  • Upgrade costs can be delayed: Making upgrades on the home as you live there can help cut down on up-front costs.
  • Ability to move quickly: In most cases, the buyer can move in immediately after closing. There is no wait time or temporary housing to worry about.
  • You know the neighborhood: You already know your neighborhood and you don’t have to worry what type of home the person next to you might build.
  • Easy to visualize: You can see the floor plan and the layout of a pre-existing home. When you build a home, it can be difficult to visualize the layout and ensure you’ll like the final product.

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The Waiting Period After Foreclosure, Bankruptcy, or Short Sale

waiting period chartIf you have lost your home through a foreclosure, short sale or bankruptcy and want to get another mortgage loan, you may be wondering how long you’ll have to wait. Your credit will take a hit after all of these situations, although possibly not as much as you think or for as long as you may think. Nevertheless, it will likely prevent you from getting another mortgage right away. The amount of time you must wait before applying for a new mortgage loan depends on the type of lender and your financial circumstances.

2016 FHA GUIDELINES

  • Bankruptcy – You may apply for a FHA insured loan after your bankruptcy has been discharged for TWO (2) years with a Chapter 7 Bankruptcy.  You may apply for a FHA insured loan after your bankruptcy has been discharged for ONE (1) year with a Chapter 13 Bankruptcy
  • Foreclosure – You may apply for a FHA insured loan THREE (3) years after the sale/deed transfer date.
  • Short Sale / Deed in Lieu – You may apply for a FHA insured loan THREE (3) years after the sale date of your foreclosure. FHA treats a short sale the same as a Foreclosure for now.
  • Credit must be re-established no late payments in past 12-24 months, depending on hardship

Application Date must be after the above waiting period to be eligible for FHA financing after hardship.

2016 VA GUIDELINES

  • Bankruptcy Ch 7 – You may apply for a VA guaranteed loan TWO (2) years after a chapter 7 Bankruptcy
  • Bankruptcy Ch 13 – If you have finished making all payments satisfactorily, the lender may conclude that you have reestablished satisfactory credit.
    • If you have satisfactorily made at least 12 months worth of the payments and the Trustee or the Bankruptcy Judge approves of the new credit, the lender may give favorable consideration.
  • Foreclosure – You may apply for a VA guaranteed loan TWO (2) years after a foreclosure
  • Short Sale / Deed in Lieu – You may apply for a VA guaranteed loan TWO (2) years after a short sale, unless it was a VA loan then restrictions apply
  • Credit must be re-established with a minimum 620 credit score

Application Date must be after the above waiting period to be eligible for VA financing after hardship.

2016 USDA GUIDELINES

  • Bankruptcy – You may apply for a USDA rural loan THREE (3) years after the discharge of a Chapter 7 or 13 Bankruptcy –
  • Foreclosure – You may apply for a USDA rural loan THREE (3) years after a Foreclosure –
  • Short Sale / Deed in Lieu of Foreclosure – If you had big issues the deed in lieu of foreclosure will be viewed as a foreclosure and you would want to wait no less than 3 years if the score is under 640.  Over 640 your UW will make the call but typically not less than one year.
  • UPDATED 12/2014 – Mortgage debt included in Bankruptcy will go by BK discharge date, and subsequent foreclosure, short sale, or deed in lieu of foreclosure will not count as an additional waiting period, as long as you are off title for any defaulted mortgages.
  • Link to 12/1/2014 USDA Guideline – HB-1-3555  Attachment 10-B  See Page 4 of 6

Date of Credit Approval must be after the above waiting period to be eligible for USDA financing after hardship.

2016 CONVENTIONAL (FANNIE MAE) GUIDELINES

  • Bankruptcy – You may apply for a Conventional, Fannie Mae loan after your Chapter 7 bankruptcy has been discharged for FOUR (4) years, TWO (2) years from the discharge of a Chapter 13
  • Foreclosure – You may apply for a Conventional, Fannie Mae loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure –
    • UPDATED – Effective 7/29/2014:  Waiting period for subsequent foreclosure that was included in Bankruptcy is waived.  If mortgage is included in Bankruptcy, waiting period defaults to FOUR (4) from the discharge date.
    • UPDATED – Effective 8/16/2014:  Short Sale or Deed in Lieu of Foreclosure not included in a Bankruptcy has a new Waiting Period of FOUR (4) years from date your name is removed from title.  This replaces the ability to buy in 24 months with 20% down payment and minimum 680 credit score.
    • SEVEN (7) Years above 90% Loan to Value | with less than 10% Down Payment – Subject to Private Mortgage Insurance underwriting guidelines.

Credit must be re-established with a minimum 620 credit score.

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Fannie Mae has reduced waiting periods in cases of extenuating circumstances – The death of a primary wage earner seems to be the only one I have been able to identify up to this point.

Date of Credit Report must be after the above waiting period to be eligible for Conventional financing after hardship.

2016 JUMBO MORTGAGE GUIDELINES

  • Bankruptcy – You may apply for a Jumbo mortgage loan once any chapter of bankruptcy has been discharged for FOUR (4) years, FIVE (5) years if multiple bankruptcy occurs on credit profile.
  • Foreclosure – You may apply for a Jumbo mortgage loan SEVEN (7) years after the sale date of your foreclosure.  Additional qualifying requirements may apply,
  • Short Sale / Deed in Lieu of Foreclosure – You may apply for a Jumbo mortgage loan:
    • SEVEN (7) Years from Short Sale or Deed in Lieu of Foreclosure with Maximum 80% Loan to Value
    • NOTE: There are investors out there that will allow you to buy again in FOUR (4) years after a short sale, but expect higher rates, higher fees, and possibly larger down payment requirement.  Jumbo lenders have not yet loosened up the qualifying guidelines for buying after a hardship.
    • It may make financial sense to consider a portfolio Jumbo lender that offer high rates, so that you can take advantage of today’s market.  Once your short sale is seasoned, refinance into a more favorable, longer term loan.

NOTE:  If hardship is the result of an extenuating circumstance, waiting periods may be reduced.  Contact lender for details.

PREPARING TO BUY AGAIN

You should begin looking at your credit at least six (6) months before you are ready to buy again.

Quite often there are things left over on your credit report that can delay your ability to qualify.

With a little head start and good advice, you can get your credit in line, qualify for financing and buy again in the lowest priced real estate market that California has seen in years and years!

We specialize in these situations so feel free to drop me an email, call or leave a question below.

The Waiting Period Chart

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8 Financial Tips For Young Adults

youmg adults
8 Financial Tips For Young Adults

 

Personal finance has not yet become a required subject in high school or college. If it is available for you to take in your school, will you apply what you learn? You may be more focused on relationships, video games, the newest fad, partying and not quite understand how decisions you make today financially will effect your future.   You might be fairly clueless about how to manage your money when you’re out in the real world for the first time. If you think that understanding personal finance is way above your head, consider that you may just be wrong in thinking that thought. All it takes to get started on the right path is the willingness to do a little reading – you don’t even need to be particularly good at math.

To help you get started, we’ll take a look at eight of the most important things to understand about money if you want to live a comfortable and prosperous life.

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7 Lies Young People Hear When Growing Up

9th place imageSo you have a few of the ‘certificate of participation’ awards and want to take those to your first job interview, well you will soon see how much weight they carry.  The ‘Wall of Gaylord Focker’ may need to stay on the wall of your parents home.” The truth? Honesty is a must, perfection is a myth, and failure is your friend.

American students have been trained from an alarmingly young age to believe that as long as they show up, they should be rewarded—and that is lulling them into a false sense of security.  After all, simply being there isn’t the same as contributing, and participating isn’t the same as succeeding. No one will be rewarded for just showing up in the real world. Success isn’t found inside a rubric. It certainly isn’t something achieved without a few experiments, mistakes, and failures along the way.

Here are seven common lies that young people hear growing up—and the blunt, uncensored truths behind them:

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How To Interview A Realtor When Selling Your Home

real estate agentWhen selling your home, choosing the Realtor who will represent your best interests is one of the most important and one of the first steps in the process.  Unfortunately, many sellers do not understand how important this is or believe that to be the case.

A piece of advice if you are thinking about selling your home, do not hire a Realtor because they are just your friend or because they are a colleagues spouse.  Every Realtor is different, period.  There are many consumers who believe every Realtor is the same and they all do the same things to sell homes, which is the farthest from the truth!  Each Realtor runs their business differently, advertises in different places, and utilizes different sales techniques.

Here are some common questions you should ask when interviewing a Realtor to sell your home.  

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Why You Need a True Mortgage PRO!

Doug Show CardAdvertising will often make consumers believe that they can walk into their local bank or call an online lender to get a mortgage. This may be fine as long as your situation is simple. However, a large percentage of mortgage applicants have situations that make them unique. Mortgage guidelines change very rapidly. There are tax consequences that differ between mortgage options. And, the mortgage needs to be considered a financial instrument that can help you build wealth over time.

 

You won’t get advice like this from the loan hacks at many of the big banks, credit unions, or online lenders. You need a true professional that studies the mortgage guidelines and everything surrounding the largest piece of debt that you will take on as a consumer. Below are a few recent rule changes that are examples of underwriting guidelines that most lenders won’t know.

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