Almost one-third of U.S. homeowners who bought in the last five years now owe more on their mortgages than their properties are worth

Second-quarter home prices fell 9.9 percent from a year earlier, giving 29 percent of owners negative equity, said Zillow, the Seattle-based service that offers values for more than 80 million homes. For those who bought at the 2006 peak of the housing market, 45 percent are now underwater, Zillow said.

This can be a frightening predicament for first-time homeowners and people who have to relocate on a regular basis for their employment. If you’re forced to relocate every few years for work it could mean giving up a significant amount of equity on each move.

Those hardest hit by the declines in the market are homeowners in California. In four of the state’s metropolitan areas Stockton, Modesto, Merced and Vallejo-Fairfield, the number of homeowners whose mortgage debts exceeded the values of their properties topped 90 percent, Zillow said.

In five more California areas which include the Inland Empire, Bakersfield, Yuba City, El Centro and Madera, the percentages were more than 80 percent whose mortgage debts exceeded the values of their properties.

Do you owe more on your mortgage than your home is worth? If so, please feel free to comment on this article with the area you are located.

Hundreds of IndyMac customers waited in line for hours to recover funds they had deposited into the failed bank and most deporsitors were granted immediate access to up to $100,000 held in their accounts with a threshold set at 50% for recovery of funds above the $100K mark. Customers with joint accounts or retirement accounts were allowed to withdraw greater amounts.

IndyMac isn’t alone in under the FBI’s scrutiny. At least 21 other companies, including Countrywide Financial, are currently under investigation due to possible fraud tied to the subprime mortgage crisis. Authorities are looking into over 1,400 cases of mortgage fraud nationwide and at more than 400 real estate player who have been indicted since March 2008.

1. Make those repairs. While in years past it may have been enough just to cut the grass and retouch the paint, anyone looking to sell in today’s market will have to take care of those more onerous repair projects as well. “The buyer that might have bought a fixer-upper five years ago now has an opportunity to purchase a short sale or a foreclosure,” says Ronald Phipps, president of Phipps Realty in Warwick, R.I. “So if you have a property that needs a lot of work, you are competing against real estate-owned [properties] that are compelling rather than interesting.” So fix the leaky roof, call the plumber, and rebuild the staircase. “The modest repairs should be done,” Phipps says. “Frankly, repairs period should be done.”

2. Price to the market. Unfortunate though it may be for sellers, demand for real estate has softened significantly. That means, in many cases, sellers will have to bring down their asking price below what the house might have fetched just a couple of years back. “The best advice that real estate practitioners can give [home sellers] is, ‘If you aren’t prepared to sell at fair market value, then you probably ought to wait,’ ” Phipps says. “The properties that are selling are selling at or slightly less than fair market–it is very, very rare to have a premium house.”

By setting an asking price above market value, homeowners risk driving potential buyers away. “People think, ‘Well, I’ll run it up the flag pole at [an above-market] price, and people will come along and make a [lower] offer. That is not really happening in this market,” says Elizabeth Blakeslee of Coldwell Banker Residential Brokerage in Washington, D.C. “If people perceive your property is being overpriced, they will just move on to the next.” Lowering the price may be difficult, but if you want to sell your home in today’s market, grit your teeth and do it. “There is a buyer for every property if the pricing is right,” says Lenn Harley, a broker at Homefinders.com.

3. Know your agent’s stats: Finding an agent with experience selling homes in your market will help ensure correct pricing. When deciding on a real estate agent, find out how long it usually takes him or her to sell a house. It’s best to choose an agent whose properties sell in an average of three or four months, a time frame that indicates the agent understands how to price the market, Harley says. “An agent whose average is six months is too long,” Harley says. “Talk to an agent that has experience selling in your market.”

4. Be flexible. Ensuring that your house is ready to show at all times will make it easier for prospective buyers to see it. So make your bed each morning and clean up the dishes before heading off to work, just in case someone may want to come by at the last minute. In addition, homeowners should be willing to disappear on Saturday and Sunday afternoons if potential buyers are free to see the property. “Access is very important,” says Shari Kruse of Prudential Northwest Realty in Seattle. “Things like limiting the hours of showing or requiring an appointment because you have a pet are reasons for real estate agents to bypass your house when they go to show.”

5. Bite your tongue: If a potential buyer comes in with an offer you consider too low, resist the urge to turn up your nose, Blakeslee says. After all, it takes a considerable amount of paperwork to make a formal offer, so even a low bid signals interest. “You need to respond–even though you are indignant and insulted,” Blakeslee says. “Do a serious counteroffer. You have nothing to lose by countering, everything to lose by rejecting it out of hand.”

Choosing a Loan Program that Fits You

If you only have enough equity available for a minimum down payment, your choices of loan program will be limited to only a few types of mortgages. If someone is giving you a gift for all or part of the down payment, your options are also limited. If you have enough for the down payment, but need the lender or seller to cover all or part of your closing costs, this further limits your options. If you borrow all or a portion of the down payment from your 401K or retirement plan, different loan programs have different rules on how you qualify. Of course, if you have enough for a large down payment, then you have lots of choices.

Your loan choices include such varied programs as conventional fixed rate loans, adjustable rate mortgages, buydowns, VA, FHA, graduated payment mortgages and all the varieties of each.

Shopping for the Best Interest Rates

One very important reason why you need to have at least some idea of your tanglible down payment is when you are for shopping interest rates this amount can make a huge difference. Some loan programs charge a slightly higher interest rate for minimal down payments. Plus, the interest rates for different loan programs are not the same. For example, conventional, VA, and FHA all offer fixed rate loans. However, the rates vary from one program to another.

If you shop lenders by phone, the loan officer will be able to tell which programs fit and quote you rates accordingly. However, if you are shopping on the internet, you have to have some idea of your loan program on your own.

Writing Your Offer and Qualification

Another reason you need to have an idea about your down payment is because it will dictate how you write your offer to purchase a home. Not only are you required to put your down payment information in the offer, but different loan programs have different rules which also affect how you write your offer. This is especially important when dealing with FHA and VA loans.

If you are asking the seller to pay all or part of your closing costs, you have to be certain your loan program allows what you are asking. For smaller down payments, lenders allow the seller to pay less closing costs than for larger down payments. Some loan programs will allow a seller to pay certain types of costs, but not others.

Finally, your down payment also affects your ability to qualify for a loan. When you make a small down payment, lenders are fairly strict about having you conform to their underwriting guidelines. For larger down payments, they will tend to make allowances or exceptions to the rules.
Conclusion

As you can see, the down payment affects every choice you make when you buy a home. Although you should look at ads, familiarize yourself with neighborhoods, learn about prices, and read as much as you can - when you get ready to take action – the first thing you should do is figure out how much money you have available for the purchase.

• Your race, color, religion, national origin, sex and marital status.

US law prohibits credit scoring from considering these facts, as well as any receipt of public assistance, or the exercise of any consumer right under the Consumer Credit Protection Act.

• Your age.

Other types of scores may consider your age, but FICO scores don’t.

• Your salary, occupation, title, employer, date employed or employment history.

Lenders may consider this information, however, as may other types of scores.

• Where you live.
• Any interest rate being charged on a particular credit card or other account.
• Any items reported as child/family support obligations or rental agreements.
• Certain types of inquiries (requests for your credit report).

The score does not count “consumer-initiated” inquiries – requests you have made for your credit report, in order to check it. It also does not count “promotional inquiries” – requests made by lenders in order to make you a “pre-approved” credit offer – or “administrative inquiries” – requests made by lenders to review your account with them. Requests that are marked as coming from employers are not counted either.

• Any information not found in your credit report.
• Any information that is not proven to be predictive of fu

ture credit performance.

• Whether or not you are participating in a credit counseling of any kind.

When you are planning to refinance your home mortgage loan, make sure to consider these four important things to ensure it will not cause any problems afterwards:

* Learn the terms of your original mortgage
Before shopping around for the appropriate home mortgage lender, ensure that your original mortgage does not have pre-payment penalties or any kind of early payoff penalty.

Many people refinance their home mortgage not knowing that they will be charged for a pre-payment penalty. These penalties usually range from six months up to three years, plus another penalty for early payoff.

Although penalty amount varies, the average pre-payment penalty amounts to a six-month worth of mortgage interest. In order to justify refinancing mortgage loans with pre-payment penalties, you need to have significant payment and interest savings.

* Maximize your options
In order to ensure you are getting the lowest rate in the market, apply for pre-approvals to several different lenders. However, make sure that the lender is not pulling out your credit history during an initial pre-approval application.

Be aware that every time your credit history is pulled, it slightly reduces your credit score. When your credit history has too many inquiries, this may prevent you from refinancing your mortgage loan with a low rate.

In addition, assess different lender offers concerning interest rate offerings and closing costs. Remember that these two factors will largely affect your lender choice. Choose a lender with feasible rates to maximize your mortgage refinancing benefits.

* Choose your lender
Once you have compared different lenders, you can now allow your choice of lender to pull your credit history. Then, make sure to get the interest rates and closing costs into writing. Ask your lender to provide you with a quotation in advance of all possible costs involved with your loan.

Ask for information about whether the refinancing loan, which you will be getting, has pre-payment penalties. Most lenders leave this important information out, knowing they might scare consumers away.

In refinancing home mortgage, make sure you shop around and assess different lending options. Do not grab the first opportunity that comes before you. Be a smart consumer and refinance your home mortgage with the lowest rate possible.

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