10 Reasons Why You Cannot Buy a House



Buying a house has never been more affordable. Low prices coupled with record low mortgage rates have made purchasing a primary residence, second home or investment property very appealing for many. Unfortunately, many purchase transactions fall out of escrow, some buyers are unable to qualify for mortgage loanfinancing and others cannot get their offer accepted.

In today’s market, buying a house requires diligence, a little bit of luck and a lot of planning. But most importantly, your expectations must be in sync with the market.

Here are 10 common pitfalls that could keep you from sealing the deal:

You have large cash deposits but no paper trail

Be prepared to source all cash deposits and transfers into your bank accounts. Are you doing side jobs? Do you get regular cash deposits from a friend or family member? All deposits and transfers from other accounts will need to be sourced.

Your gift money and/or down payment cannot be sourced

Getting money from mom and dad to purchase a house? That’s great; here’s what they will need to provide so you can secure a home loan stress-free:

  • Signed gift letter stating the money is truly a gift.
  • Full bank statement showing they had the ability to gift funds.

Your debt-to-income ratio is above 45 percent

Your debt-to-income ratio (DTI) is the amount of a new monthly house payment plus other recurring monthly debt divided by your gross monthly income. Most loan programs require that this ratio be at or below 45 percent. You can determine whether a house is within your affordability range in two ways:

  • Calculate your DTI: Proposed mortgage payment + all minimum monthly debt obligations ÷ gross monthly income.
  • Calculate your maximum mortgage payment: Gross monthly income × .45 (45 percent DTI) − all minimum monthly debt obligations.

You’re self-employed and show losses on your Schedule C

You cannot have your cake with the tax man, eat it too and expect to qualify for the maximum house price. If you file your income taxes on a Schedule C be prepared to show strong positive figures on any one of the following line items (note: this will likely cause you to pay more in income taxes, so consult with a tax professional).

  • Line 31 net profit (business use of the home can be added back for income qualifying)
  • Line 12 depletion
  • Line 13 depreciation

You take 2106 business expenses on your tax return

You’re a W2 employee, and you personally pay for business-related expenses out of your own pocket. Sounds great, right? Here’s the red flag: Lenders calculate 2106 business expenses as a debt and will take this annual expense and divide it by 12 to get a monthly figure.

You need a seller credit for closing costs

Many buyers today, especially first-time home buyers, are short on cash to close and need seller concessions for closing costs. But what if the seller doesn’t agree? Be prepared to pay about 3 percent of the purchase price in closing costs, in addition to your down payment.

You’re indecisive

Ideally, you should shop for your loan before making an offer on a house. If, however, your offer is accepted before you choose which lender or loan program you’re going to use, then you will be forced to do one of two things:

  • Commit to working with a lender.
  • Cancel the contract if you cannot meet obligations.

The house has structural and/or pest-related issues

These things happen, so be ready for it. If you’re going with a government-backed mortgage for your home purchase, you will be subjected to slightly higher appraisal standards than if you were going with a conventional mortgage.

You’re competing with multiple offers and stronger buyers

So how do you win? Start by asking your mortgage lender to close the transaction in less than 30 days. This increases your negotiating ability.

You have unrealistic purchase price expectations

This happens time and time again: Buyers are very particular about what they’re looking for — and what they’re willing to pay for it. Most buyers have to compromise at some point along the way, but it often takes multiple offers on several homes for this fact to ultimately resonate. A good real estate agent should be able to advise you of the reasonableness of your offer.

 Scott Sheldon is a senior loan officer and consumer advocate based in Santa Rosa, California. Scott has been seen in Yahoo! Homes, CNN Money, Marketwatch and The Wall Street Journal. Connect with him at Sonoma County Mortgages.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Original Article


Zillow Sues Trulia Over Home Valuations


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Lawsuit claims ‘Trulia Estimates’ infringe on 2011 patent


The battle between the two most popular real estate portals has reached a boiling point. Property search and valuation company Zillow Inc. is suing rival Trulia Inc., alleging the latter’s automated property valuations infringe on a patent issued to Zillow last year. The suit comes on the heels of Trulia publicly filing for an initial public offering of 5 million shares of the company’s stock. Zillow went public last year.

In a complaint filed Wednesday in a U.S. district court in Seattle, Zillow alleges Trulia has infringed on U.S. Patent 7,970,674 B2. The patent’s title, “Automatically determining a current value for a real estate property, such as a home, that is tailored to input from a human user, such as its owner,” describes Zillow’s process for using information supplied by homeowners and real estate professionals to refine Zillow’s automatic home valuations, called “Zestimates.” Zillow applied for the patent on Feb. 3, 2006 and it was issued to the company June 28, 2011.

Zestimates have made the site popular with consumers and “have played a major role in Zillow’s success and growth,” Zillow said in the complaint. The valuations made waves in the real estate industry when the portal first debuted in 2006 and were a key differentiator for the company at launch.

Last September, Trulia rolled out its Trulia Estimates tool in beta, providing consumers with an assessment of a home’s worth. Trulia Estimates use an automated valuation model (AVM) that takes into account recent sales information for other homes in the area, and property characteristics taken from public records including the number of bedrooms and square footage as well as information provided by homeowners. Trulia Estimates launched nationally in March.

Zillow and Trulia both declined to comment for this story. Trulia is also in a “quiet period” during which the company is subject to a ban on discussing itself while in registration to go public.



30-Year Fixed Mortgage Rate Drops 11 Basis Points, Back Down to Historically Low Levels


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Author:Camille Salama

Mortgage rates for 30-year fixed mortgages fell this week, with the current rate borrowers were quoted on Zillow Mortgage Marketplace at 3.39 percent, down from 3.5 percent at this same time last week.

The 30-year fixed mortgage rate hovered between 3.4 and 3.5 percent for the majority of the week, dropping to the current rate this morning.

“This past week, rates fell back down close to the historic low level we’ve enjoyed since June following the release of the Federal Open Market Committee minutes, which suggested the Federal Reserve was more supportive of additional stimulus in the form of quantitative easing (QE3) than the market had expected,” said Erin Lantz, director of Zillow Mortgage Marketplace.

“Now that rates have returned to the low plateau where they’ve spent most of the summer, we expect rates to remain close to this equilibrium this coming week as the market awaits more significant events in the first half of September,” added Lantz.

Additionally, the 15-year fixed mortgage rate this morning was 2.76 percent, and for 5/1 ARMs, the rate was 2.38 percent.

What are the rates right now? Check Zillow Mortgage Marketplace for up-to-the-minute mortgage rates for your state.

Original Article

Mortgage Rates Continue To Tick Back Up


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By MARCY GORDON, Associated Press

WASHINGTON — Average U.S. rates on fixed mortgages ticked up for the third straight week, staying slightly above record lows. Cheap mortgages have helped fuel a modest housing recovery this year.

Mortgage buyer Freddie Mac says the rate on the 30-year loan increased to 3.62 percent, up from 3.59 percent last week. Three weeks ago, the rate fell to 3.49 percent, the lowest since long-term mortgages began in the 1950s.

The average rate on the 15-year fixed mortgage, a popular refinancing option, rose to 2.88 percent. That’s up from 2.84 percent last week and record low of 2.80 percent three weeks ago.

The availability of low rates has lifted home sales higher this year. Home prices have also increased, largely because the supply of homes has shrunk while sales have risen. And builder confidence is at its highest level since March 2007, according to a survey by the National Association of Home Builders.

Homebuilders broke ground on slightly fewer homes in July, down from June when they started homes at the fastest pace since October 2008. Single-family homes and apartments started in July dipped 1.1 percent to a seasonally adjusted annual rate of 746,000, the government said Thursday.

Still, builders in July requested the most building permits since August 2008, suggesting many expect demand for newly built homes to rise in the months ahead.

The pace of home sales remains well below healthy levels, however. Many people are still having difficulty qualifying for home loans or can’t afford larger down payments required by banks.

Mortgage rates are low because they tend to track the yield on the 10-year Treasury note. A weaker U.S. economy and uncertainty about how Europe will resolve its debt crisis have led investors to buy more Treasury securities, which are considered safe investments. As demand for Treasury’s increase, the yield falls.

To calculate average rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

The average does not include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for 30-year loans was 0.6 point, unchanged from last week. The fee for 15-year loans also held steady at 0.6 point.

The average rate on one-year adjustable rate mortgages rose to 2.69 percent from 2.65 percent last week. The fee for one-year adjustable rate loans was unchanged at 0.4 point.

The average rate on five-year adjustable rate mortgages declined to 2.76 percent from 2.77 percent. The fee was steady at 0.6 point.

Original Article

Texas Home Sales Up, Inventory Down: What Does It Mean?



Aug. 1, 2012

The latest Texas Quarterly Housing Report, compiled by the Real Estate Center at Texas A&M and issued by the Texas Association of REALTORS®, paints a strikingly different picture from the same time a year ago. In second quarter 2012, statewide home sales were up 13%, the median and average sales prices were up 7%, and the inventory of homes for sale was down 27% from second quarter 2011. These positive numbers give real credence to the idea that Texas continues to lead the nation in economic recovery. Why are things so different in the Lone Star State, and what can Texans expect for the rest of the year and beyond?
Read the report.
Listen to the podcast.

US New-Home Sales Fall 8.4%


StockMarketWire.com– US new-home sales fell to a seasonally-adjusted annual rate of 350,000 in June – 8.4% down from May’s revised rate of 382,000.Figures released by the US Census Bureau and the Department of Housing and Urban Development show that new-home sales are 15.1% above the June 2011 estimate of 304,000.The median sales price of new houses sold in June 2012 was $232,600; the average sales price was $273,900.

The seasonally-adjusted estimate of new houses for sale at the end of June was 144,000.

“This represents a supply of 4.9 months at the current sales rate.

Story provided by StockMarketWire.com