Credit

How will the financial bailout make it easier for me to buy a house?

At this writing, it has not helped at all. All the gibberish that we are hearing from the banks is just that … gibberish.  We’ve heard them say that some of the funds will be used to help them offset or mitigate future losses, shore up their poirtfolios, acquire more banks, etc. But not once have we heard any of them say that the TARP funds will be used to ease credit or to make it easier for consumers to borrow.

The fact that the banks were given this money without strings attached is absurd. The intent and expectation is certainly a far different cry than reality. Let’s face it – Parents will hardly give their children a weekly allowance without some general guidelines.  

In sum, most of our politicians in Washington are far more concerned with padding their own beds, which means to do and say only that which sounds politically advantageous. This TARP program, at least at this point, is nothing but a sham. “We the people” are the dupes.

How is the credit crunch affecting real estate? My credit is not great but I would like to consider buying a house.

The underwriting approvals are tougher today than we’ve ever seen before. On the other hand, we just closed on a property this week that only took 12 days from sales contract to closing. The lender was experienced and knew up front what the underwriters would be looking for. That made a big difference!

If you can go VA or FHA, your odds of success will be greater. Those programs allow for greater debt-to-income ratios and will permit you to close with little or no money down. The conventional markets are much tougher. Plus if you are putting less than 20% down, you will have to qualify for Mortgage Insurance (MI) in addition to your loan. MI approval can actually be worse!

Is a deed-in-lieu of foreclosure better on your credit score than a regular foreclosure?

 

Not really. According to local mortgage originators, your credit score will be lowered by approximately 280 points either way. A deed-in-lieu of foreclosure can be a better option because the agreement will typically stipulate that the bank will not seek a deficiency judgment against you. That is not true of a “regular” foreclosure, in which case a judgment can be obtained against you. According to our attorney, a default judgment against you in Florida can be kept alive forup to 20 years!