This upcoming weekend, my daughter Megan, the eldest of our four children is graduating from Binghamton University. When these type of life events happen, I like to reflect upon both “How did we get here?” and “What are the best actions I can take to make sure things stay on the right path?” As I thought about it, parallels to people thinking about buying a home popped into my head.

The “How did we get here?” question had me pondering the time before Megan was conceived. There were plenty of reasons NOT to pull the trigger- with economic uncertainty being the leading concern. How would we pay for the increased expenses with less of an income? How would our personal time be compromised? Shouldn’t we wait until we had more in our savings account? If we applied conventional wisdom to our situation, we would have waited; but by not waiting, the benefits we gained were far greater than we ever imagined. Being a parent (especially of a kid like Megan) is the greatest gift anyone can have…and cheating ourselves of that, for even a day, would have been a tragedy. Sure, we sacrificed some vacations or nights out, but the joy of beginning our family (which later added three sons to the mix) gave us such an upgraded life. I can hardly remember the drawbacks and can only celebrate the great memories of laughter, song, and hugs.

So, my advice to people looking to take somewhat of a leap of faith into homeownership (or moving up) is that if you wait for everything to be perfect, you will cheat yourself of the memories you could be starting today. Seriously, what a terrific opportunity to start the new chapter of your future:

• Incredible Inventory – The amount of available homes to choose from is staggering, but waiting for the “perfect” house is costing you time….the time you will enjoy your home.
• Amazing Prices – In some parts of the country, prices are back to 2005 levels, some 2003, and some even 2001. What else can you buy for the same price as 7-11 years ago?  Maybe some personal electronic equipment that is outdated today.
• Awesome Interest Rates – Rates are back to all time lows. What are you waiting for?

Now, I’ll move to the “What are the best actions I can take to make sure things stay on the right path?” question. Megan wants to be a teacher. She will be a great teacher, but jobs on Long Island are tough to find with all the budget cuts and such. So, Megan has decided to continue her education and get her Masters, while working at our office, as she waits for improvements in the job market. She is positioning herself to be better prepared for her future opportunities. Good decision.

As I talk to prospective homebuyers, it’s about being pre-approved.  Having a seasoned mortgage professional review their income, assets and credit to help position them in the best light, so that when they find that special opportunity, they are poised to act on it.

Buying a home, many times, begins with the emotional decision to change one’s life. After deciding to take the plunge, we use numbers and logic (inventory, affordability, and interest rates) to justify the emotion. Add to that, taking the care to prepare by working for a solid pre-approval, and I want to tell everyone…. “Go make your Megan!”

Overall, U.S. households scored 69.9 out of 100 points, with a score under 70 indicating a state of financial distress. While still 0.1 points shy of beating the non-distress category, the score is an improvement from the previous quarter’s 67.6.

Also, 69.9 is the highest score since the 2008 third quarter and the 2.3 point increase from the previous quarter is the highest quarterly jump in seven years.

The index measures financial distress by taking into account five categories: employment, housing, credit, how families manage household budgets, and net worth.

“At long last, the average U.S. household is on the verge of moving out of financial distress,” said Mark Cole, chief operating officer of CredAbility and author of the index.

Cole added that while finances are still tight, so long as gains in employment and housing continue, the financial health of the average U.S. household will further stabilize.

CredAbility started measuring distress among households in the 25 largest metro statistical areas (MSAs) for the first quarter of 2012.

The five MSAs in the most financial distress were Tampa-St. Petersburg (57.9), Detroit (60), Miami-Fort Lauderdale-West Palm Beach (61.5), Atlanta (62.6), and Los Angeles, (62.7). All five areas lag the nation in employment and housing, accounting for their low scores.

The MSAs under the least amount of distress were Washington, D.C (74.1), Boston (73.1), Minneapolis-St. Paul (72.4), Honolulu (71.8), and Dallas-Fort Worth (70.1).

One common characteristic of the six most distressed MSAs was they all had financial distress scores under 50 in the employment category, with Los Angeles at the bottom with a score of 39.5.

Among the 50 states, the most distressed were Nevada (61.66), Georgia (64.04), Michigan (64.75), Mississippi (65.06) and Florida (65.70).

The states in the least amount of distress were North Dakota (84.01), South Dakota (80.21), Wyoming (79.21), Nebraska (79.18), and Vermont (77.75).

Overall, 28 states scored 70 or above during the first quarter.

Article courtesy of DSNews.com. CredAbility is a nonprofit credit counseling and education agency.

Fannie Mae’s monthly housing survey indicated 5% more people expect home prices to increase this month over the 27 percent surveyed last month who thought prices would increase this year.

Nearly half of consumers expect higher rental prices as well, the highest number registered by Fannie Mae since its monthly tracking began in June 2010. Americans’ rental price expectations for the next year continue to rise, reaching their record high level for the Fannie Mae survey this month.

The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.

Consumers’ confidence about their own finances is stabilizing, with 44 percent expecting an improvement over the next year.

Higher Mortgage Rates Expected

There is an increasing share of consumers expecting both higher mortgage rates and home prices over the next 12 months.

Doug Duncan, Vice President and chief economist of Fannie Mae says, “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month.”

Duncan says, “Some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice. Conditions are coming together to encourage people to want to buy homes.”

While the “sales of existing homes in January and February marked the strongest start to a year since 2007,” according to the combined Housing and Urban Development (HUD)/Treasury statement. “Data on home prices changed little from the previous month – marking a fifth month of seasonal lows.”

For further Fannie Mae survey findings, visit the Fannie Mae Monthly National Housing site.

The past week has been a whirlwind for me. Last Thursday, I had major surgery. I tell you this only as an explanation of how I came to write this week’s blog.

I have been in a rehab facility for a couple days and what is most impressive is how the other patients are so upbeat and social. Now, most of the residents here are seniors and they are quite engaging and inquisitive. As they see me working on my laptop or hear me on my phone, they always ask what I do. When I talk about being in the mortgage business and my interaction with real estate agents, there is no shortage of opinions on these topics. But what I found most exciting was the universal belief in homeownership and that now was a great opportunity for young people.

“My wife and I bought our home in 1967. We raised a family and paid off our mortgage. It’s going to be the only real asset we will pass on to our kids. But really, that house IS our family- all the memories. Buying a house is the best thing a family can do.”

“We paid $29,000 for our home in 1969. It’s worth about $500,000 now. We should have sold it for $600,000 a few years back, but still, it was a great investment.”

“We refinanced our home twice- once for improvements and once to pay for our kids’ college education. It was the only way we could have afforded college in 1985. I can’t imagine how people pay for it today.”

“When my husband passed here years ago, I took out a reverse mortgage to help make ends meet. I was also able to give some money to my granddaughter to use for a down payment on a new home for her family. I like seeing the results of my giving, while I am here to enjoy it.”

It was great to hear those who have done it are glad they did. If you are still debating a purchase (with these great prices and low rates), maybe you need to sit and chat with some seniors- people whose experience you can learn from.

PS – I am going home tomorrow. One week after surgery. Doctors and nurses are amazing.

A lot of people get into trouble by moving into a home they’re only going to be in for a relatively short period of time, and they start remodeling and building additions that are sort of on their fantasy list, but they’re not going to be there long enough to really enjoy.

Here are four reasons to “remodel with caution”, especially if you want to maximize your chances of a profitable sale later on.

1. High maintenance – If your upgrade requires too much work to maintain, buyers may view it as more of a problem than an asset. A prime example is an in-ground swimming pool, which can cost a small fortune to maintain and keep clean.

2. Overdressed – Luxurious features can be a nice selling point, but only if they blend in with rather than stand out from what the neighbors have. Having the nicest home in the neighborhood can be a bad thing when it’s time to sell. A prime example would be upgrading the kitchen in a starter home to look like the kitchens in high-end home magazines.

3. Too Personal – Making a “Cookie-Cutter House” conform to your own unique taste. Any time you deviate, no matter what how minor the improvement is, from what is a fairly traditional, single-family house, you run the risk of improving in a way that will not lend itself to recouping your investment at re-sale time.

4. Unpopular – If no one else on the block has a room like the one you’re adding, or all the other houses boast the very feature you’re getting rid of, watch out. For example, although converting your two car garage into an office or bedroom can be a less expensive way to add square footage and create more living space, it can have drawbacks. Potential homebuyers might miss the covered parking more than they welcome the additional room, especially if all other homes in the neighborhood have garages.

This final tip for whatever type of home renovation you might be considering: Before you do anything to your house, live in it for a while. Prioritize the projects you want to complete, then go back in a few months and see if your list has changed.

With good preparation, most things are easier. That works in mortgages too! Today, I want to give you some ideas that can make your mortgage experience less painful.

Income Items:

1. Gather your documents. Today, many people will have to produce 2 years’ complete tax returns, including W2′s, 1099′s, K1′s, and all the schedules, as well as a month’s worth of pay stubs.
2. Be prepared to explain them. Deductions in your returns and your pay stubs may impact the income your lender will use to qualify you which, in turn, has a big impact on the loan you will get.
3. Have a breakdown of base pay versus overtime for both your pay stubs and 2 years’ W2′s. Lenders treat overtime (and bonus income) differently than your base pay. Be prepared to explain any changes over the last few years because your loan officer will ask you about it.

Asset Items:

1. Start accumulating your bank statements. Lenders look back 3 months from when you sign your contract of sale.
2. You will have to explain any and all large deposits (which are defined as deposits greater than your regular pay check) because lenders want to make sure you haven’t taken out any new loans that aren’t on your credit report.
3. Avoid any significant cash deposits. However, if you did have a cash deposit, understand that the lender will have you source it (a bill of sale and DMV receipt for that motorcycle, for example).
4. If you will be receiving a gift, consult your loan officer on how to document it (from the donor’s ability to how you deposit it).

Credit Items:

1. Ask your loan officer to run your credit and go over it with them. Believe it or not, most credit reports contain errors. Best to identify them and get working on correcting them as early as possible.
2. Do what you can to pay down your balances to under 30% of available credit to help you get the best score possible.
3. Do NOT close accounts or pay off collection accounts without discussing it with your loan officer. Either one of these logical moves can actually have a negative impact on your score.

When buying a home, remember the Boy Scout motto, “Be prepared”. Following these suggestions will make your loan approval easier and less stressful.

On September 29th, 2006 “Mikey”, made the ultimate sacrifice when he laid his life down for 2 other members of our platoon.  When the grenade was tossed on the roof, it hit Mikey in the chest and landed on the ground right in front of him.  Mikey had an out- he could have taken cover and dove for the door behind him; Instead hey yelled, “Grenade” and dropped down on it, saving our two brothers to his right and left.

Amongst each other, we wonder what each of us would have done in that instant.  We’d all like to think we’d make as noble a sacrifice as Mikey did, but in that instant, instinct takes over and really there’s no way to know.  No one would have thought less of him had he dove for cover.  The instinct to protect yourself is natural.  But he didn’t.  Instead his Act of Valor is one we’ll all remember forever.  For this, Mikey was awarded the Medal of Honor, our Nations highest award for Military Valor (see Medal of Honor Citation here).

The timing and circumstances that lead to the events on that fateful day rattle around in my head over and over again but I know Mikey gave me a second chance at life.  I know others in our platoon feel the same way- especially those who were closest to the blast.

It leaves me wondering…no challenging myself…constantly, “Andrew- what have you done today to EARN THIS?”

I look at my two sons who have the chance to be raised by their father and I know that the highest and best way I can honor Mikey and his Act of Valor is to ensure that, not when my time comes to die, that I lay in wonder for what more I could have done- what more I could have done for my God, for my Country, for my Community, for my Family.

We can ALL honor Mikey and the men and women who have served and sacrificed for our Country by giving ALL WE CAN, no matter our vocation or occupation- we can ALL make a difference in our OWN way and you can too.

In THEIR own way this week, VFW Post 2082 in Lemon Grove, CA has renamed itself in honor of Michael Anthony Monsoor that his Act of Valor- what he represents for our freedom will live on and perhaps inspire a new generation of Americans to stand tall for our freedoms and way of life.

Andrew Paul, Branch Manager at Benchmark Mortgage San Diego, is a former Navy Seal and San Diego VA Loan Specialist. He understands DFAS, HOSTILE FIRE PAY and IMMINENT DANGER PAY. He has a family too and values the importance of owning a home to know your family is safe and secure while you’re away earning a living and defending freedom.

One of the great things about this country is that we do a lot for those who have served us. And in the area of real estate financing, we can do exceptional things.

Understand that the VA (Veterans’ Administration) is, in the mortgage world, like HUD is with FHA financing. They are an insurance company, collecting premiums and using the backing of the Federal government to guarantee the payments to lenders. Because of the government’s guarantee, lenders can stretch traditional guidelines and offer very competitive terms (of course, while adhering to the VA’s guidance).

Some of the more attractive features of a VA loan are:

1. 100% Financing on Home Purchases – Veterans, assuming they are in good standing, can buy a home with no money down. In most cases, the maximum VA loan is $417,000.
2. The Ability to Finance Reasonable Closing Costs – On many VA loans, the closing costs are negotiated into the sales price and the seller pays them. This feature can significantly reduce the cash a veteran needs to buy a home.
3. More Understanding with Regards to Credit Challenges – In an effort to help those who served us, lenders are more liberal towards hiccups in credit.
4. Common-Sense Look at Income – Rather than approve loans strictly by income ratios, VA mortgages incorporate what is called Residual Income. There is a form that actually budgets all expenses (not just housing) to account for family size, heating and electrical usage, and more.
5. Financed Insurance Premium – The VA charges what they call a Funding Fee to set up a fund to reimburse lenders, should a default occur. The Funding Fee varies on loan terms and usage (consult your lender for exact costs), but the good news is that it is typically just added to your loan. Instead of paying thousands of dollars up front, you can pay $10-$50 a month in a higher payment.
6. Refinancing Your VA Loan is Easy – Through the I.R.R.L. (Interest Rate Reduction Loan) Program, getting a better rate (if the market has better rates) does not carry with it all the verifications of income, credit, appraisals, and assets of other loans…and closing costs can be added into the loan! The logic is the VA is already “on the hook” and lowering the payment increases the likelihood of continued payments, so why not be as lenient as possible.

For more detailed answers, contact your local mortgage professional. With three million veterans returning home in the next couple years, the opportunity of VA financing needs to be publicized.

Reduced prices, record-low mortgage rates, higher rents and an improving job market appear to be emboldening many would-be buyers. Open houses are drawing crowds. A wave of foreclosures is leading investors to grab bargain-priced homes.

And many people seem to have concluded that prices won’t drop much further. In some areas, prices have begun to tick up.

Interviews with more than two dozen potential buyers, sellers, brokers, Realtors and economists suggest that confidence is up and that sales will move slowly but steadily higher.

“The biggest challenge that we’ve had over the past four years is fear — fear that the economy is collapsing, that property values are collapsing, that the world is coming to an end,” says Mark Prather, a broker at ERA Buy America Real Estate in La Palma, Calif. “The fear factor is all but gone.”

Prather says the number of prospective buyers who contacted his company last month was about 35 percent more than a year ago.

The spring buying season got an early lift-off from an uncommonly warm January and February — a winter that was the best for sales of previously occupied homes in five years. Permits to build houses and apartments rose in February to their highest level since 2008.

“People feel much more confident,” said Steve Brown, co-owner of real estate company Irongate Inc. of Dayton, Ohio, who says sales jumped more than 16 percent for the first two months of 2012 over the same period last year. “There’s no question there’s a good feeling in the marketplace.”

Some analysts detected a slight uptick in prices for February and March. CoreLogic, a real estate data firm, says prices for homes not at risk of foreclosure — about two thirds of the market — rose 0.7 percent in February. It was the first increase in four years. Price gains occurred both in some hard-hit areas, such as Phoenix, and some still-thriving areas like New York and Washington.

In Miami, the average sales price has surged 14 percent in the past year, according to Trulia, a real estate data firm. In Phoenix, the average is up 13 percent, in Pittsburgh 9 percent.

Earnings reports Friday from two big banks suggested that more people are taking out mortgages. JPMorgan Chase issued 6 percent more mortgages from January through March than it did a year ago and got 33 percent more applications. Wells Fargo issued 54 percent more mortgages and received 84 percent more applications.

Still, few think the housing industry is nearing a return to full health. For that to happen, a robust job market would be needed. More hiring would give more people the money and job security to buy. That would help boost sales and prices.

Such areas as Atlanta, suburban Las Vegas and central California show few signs of recovery. And in some others — from Seattle to Cleveland — home prices have continued to slip. The average has dropped 9 percent in Seattle over the past 12 months and 7 percent in Cleveland.

But in many parts of the country, including thriving areas of Boston, Dallas and Seattle, confidence is rising along with prices. Among the reasons:

• Hiring has strengthened. Each month from January through March generated a solid average of 212,000 jobs. Unemployment has sunk from 9.1 percent in August to 8.2 percent. More job security tends to embolden more people to invest in a home. In Dayton, for example, the University of Dayton is hiring for a new engineering research center, General Electric is hiring hundreds of contractors and the nearby Wright-Patterson Air Force Base are expanding.

• Loans remain cheap. The average rate on a 30-year fixed-rate mortgage is 3.88 percent. That’s just above the 3.87 percent reached in February — the lowest since long-term mortgages were first offered in the 1950s.

• Homes are more affordable. Nationwide, home prices are down 34 percent since 2006.

• Americans are more confident. The Thomson Reuters/University of Michigan’s survey of consumer confidence rose in March for a seventh straight month to its highest level in 13 months.

Also fueling interest are signs that home values are finally stabilizing. One factor that had slowed purchases after the housing boom ended in late 2006 was fear that a home would lose value soon after its purchase.

But the price declines slowed toward the end of 2011, according to the Wells Fargo/Case-Shiller home price index. And CoreLogic says the average price nationally rose slightly in January and February.

“Unless prices went down, I don’t think we would have ever been able to afford a home,” said John Henschel, 37, an information technology consultant who will move with his family into a five-bedroom house in Wheaton, Ill., in May. “But we feel like prices aren’t going to go back down. We’re confident. So why not?”

When the landlord on their Chicago apartment told them he was selling it, Henschel and his wife decided it was time to buy. The home they bought for nearly $450,000 could have fetched more than $570,000 six years ago, according to housing website Zillow.com.

On a rainy Saturday this month in long-struggling Riverside, Calif., 12 families visited a three-bedroom house priced at $199,999. Ten others stopped by in the first hour of the next day’s open house. By the end of the weekend, two buyers had made offers.

“We’re seeing more buyer activity this spring than we’ve seen in probably four years,” said Liane Thomas, the broker who was showing the house.

Prices in the area could rise in coming months because the supply of homes for sale in Riverside is down — from nearly 19,000 last year to 13,000 in February.

Many potential buyers are hunting for deals in places that were especially hurt by the housing bust. In Sarasota, Fla., which boasts wide sugar-sand beaches, condos are selling for an average of $325,000, compared with more than $550,000 at the height of the boom, said Marc Rasmussen, a broker.

Homes nearing foreclosure account for nearly half of all properties on the market, according to the Campbell/Inside Mortgage Finance HousingPulse survey. That compares with 10 percent in healthy economies. Many are receiving multiple offers because their prices have plunged.

In Phoenix, a foreclosed home offered for $77,000 that had been vandalized received 21 offers last month at or near the asking price — roughly the price it sold for. The average time a home sits on the market in Phoenix has dropped from 114 days last year to 90 days, according to the Cromford Report, a data research group.

In suburban Washington, D.C., Rory Obletz and his wife have been saving to buy after renting for six years. Obletz, 27, failed in two previous bids for single-family homes. He’s hoping a third bid — about $10,000 above the asking price of $399,000 for a home in Silver Spring, Md. — will succeed this month.

“One home we went to, it was under contract by the time we walked out of the house,” Obletz said. “If you really want to get something, you don’t have a lot of time to think about it.”

It isn’t just bargain-hunting families seeking homes. Investors are increasingly buying single-family houses, fixing them up and re-selling them or converting them into rentals.

Investors are out-bidding many first-time buyers on cheaper homes in particular. Sales of homes between $100,000 and $250,000 have jumped nearly 19 percent over the past year. For homes between $250,000 and $500,000, sales are up 13 percent.

More expensive homes, from $500,000 to $750,000, whose sales tend to contribute the most to the U.S. economy, are up a smaller 6.7 percent.

For buyers seeking to move up to a bigger home or to relocate, the toughest challenge is often selling the home they’re in. According to CoreLogic, about 11 million homeowners are “underwater” — they owe more on their mortgage than their home is worth.

Yet for first-timers like Obletz, who have been saving and watching as homes have become more affordable, the time feels right.

“Rent is a little more expensive, and we have the money, so we might as well jump on it,” he says.

_

By ALEX VEIGA, AP Real Estate Writers.

Veiga reported from Los Angeles. Associated Press Writer Tamara Lush in Sarasota, Fla., contributed to this report.

Copyright © 2012 The Associated Press. All rights reserved.

I learned a long time ago that “common sense is NOT common practice“. This is especially the case during the emotional time that surrounds buying a home, when people tend to do some non-commonsensical things. Here are a few that I’ve seen over the years that have delayed (and even killed) deals:

1. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.
2. Don’t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios…higher ratios make for riskier loans…and sometimes qualified borrowers are no longer qualifying.
3. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won’t be making the payments, the lender will be counting the payment against you.
4. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.
5. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car, when you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
6. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. A major component of your score is your length and depth credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light.