Hi all!

We've had some crazy weather running across the country the past few weeks--I'm not sure if I'm supposed to be hot or cold any more! I do feel like I need to keep multiple layers with me at all times, though!

I work often with first time home buyers, and it's alway interesting how we (those of us that have been through the process many times) take for granted the "little things." This past week I had one who was concerned about what and EMD is, how it works and does this mean I have to pay MORE for the house I'm buying?

First off, and EMD is short for Earnest Money Deposit, and this is a check you write when you put in an offer on a house. This money goes towards the purchase price of the house OR the closing costs. It is not in addition to the agreed upon price.

Why is an EMD required? This is a good-faith payment to the seller saying you are seriously interested in this home, however, if you get cold feet because you suddenly do not like the house, this is money you could lose. If you are getting a loan, though, and are concerned that you "might not get" the loan, there is a contingency clause regarding financing. This means that if you don't get approved for the loan to buy the home, you can get your EMD back.

How much is an EMD? It depends on your area specifically. It is usually at least one percent of the offer price, or some areas will have a minimum of $1000 regardless. Either way, this is still "your" money and goes towards the purchase price/closing costs.

Does the seller get my EMD as soon as I pay it? It can, however, not customarily. In Florida, you will make a check out to either the real estate brokerage listing the home, or a title company that will be holding the money in escrow until the closing on the home. The amount you paid will be a part of whatever your costs are at closing. If, for some reason, there is excess money left over at closing, then you can get that back at closing, depending on your lender.

I've seen a few buyers that are concerned about an EMD, thinking they are paying more, or it's money they will never see again, but you have to look at it like this--it's a large investment--buying your first home--you need to put forth a good faith deposit and let the seller know you're serious about buying their home.

If you have questions or are concerned about how the EMD works, talk with your lender or your realtor--or feel free to ask questions here!

Cheers!

Hi all!

It got cold over the last few days (ok, "cold" for this part of Florida is in the 30's at night and not getting above 50 during the day), but I have to admit, I'd rather have this weather than what they are dealing with up north! Digging snow tunnels is great when you're a kid though!

Anyhow, I had a conversation with a friend of mine this morning, a mortgage broker and one question that came up that many buyers are wondering right now...are there ANY 100 percent financing home loans available left? With all the changes, and stricter guidelines for getting a loan, people still may not have 20 percent of a down payment saved up to buy their home.

Well, believe it or not...the answer is yes...for starters, the Veterans Administration is still offering 100 percent financing (which in some cases can be raised to 103 percent to roll in the funding fee you must pay). If you are a disabled veteran, though, you do NOT have to pay that funding fee (minimum of 2.2 percent of the loan amount). You do need to ensure your lender gets a copy of your disability determination as part of your necessary paperwork.

But what if you are not a veteran? What are your options? Well, the only program out there that still does offer 100 percent financing is Rural Development loans. This means that the house itself has to be considered in a rural area--which may be different than what you think. In Okaloosa County, Florida, the area between Hurlburt Field, and Eglin AFB is NOT rural (Fort Walton Beach), however, areas of Mary Esther, Navarre and Destin (YES, DESTIN) are considered rural development.

So what about this Rural Development program? Right now, with one of the programs my friend was telling me about is that the seller gets an appraisal on the property when they list the property. Rural development lenders will not lend more than what the house is worth "today" (ok--so that's the way it is with ANY lender). However, since Rural Development lenders will lend up to 100percent of the property VALUE (not just contract price--all other lenders lend based on the LOWER of appraisal price or contract price).

Once the seller has the appraisal on their Rural Development property, they KNOW that the buyer cannot get more than that for their loan, so now they can determine how much they are willing to pay towards the buyers closing costs on top of their realtor fees, and determine their bottom line early in the process.

So why is this such a good idea? Many times, a house is listed and while the realtor does a comparative market analysis on it, the true value isn't known until the appraisal is done. With knowing the appraisal amount now, both the buyer and seller know what they're dealing with in terms of an appraisal. If the seller gets the appraisal and realizes that it won't give them enough, they don't have to waste their time listing the property for more than they will know it will sell for today.

So, are you ready to buy? Does this give you some good options? Then don't hesitate, do something about it!

www.rurdev.usda.gov

www.homeloans.va.gov

Hi all!

I hope everyone had a Merry Christmas and Happy New Year! I enjoyed time over the holidays spent with family, and everyone I've spoken with has said the same thing. Family is important, and my broker put it in perspective when he said "no matter what you do for a living, the bottom line is that you do it for your family, to be with them and spend time with them." This was a holiday season that it really hit home.

That said, we all have our New Year's resolutions, but I find it amazing how so many go by the wayside within six weeks. I stopped making "New Year's resolutions" many years ago for that very reason. I set goals, but not necessarily at the beginning of the year. Businesses usually set up projections/plans/goals for the next year mostly to be in conjunction with the new year--which coincides with the tax year.

So what are your goals? Not just for this year, but your future? Are you renting, or in a situation where you'd like to buy a home? Do you have a great job, but want a better job? Or are you working at a crappy job and want better, or you love your job, but think that things could be better? How about your family life? Are there things you would like to do and it just hasn't happened?

If you haven't written down your goals, now is the time to do it. Owning a house, buying an investment property, getting a better job, traveling or spending more time with your family--these are all goals. Some people prefer pictures--cut out from a magazine, or off the internet--do what works for you. Write them down and then be open to ideas on how to accomplish them as they come to you.

I'll use buying a house as an example. It's at the top of your list and you're ready to own. Let's say you've never owned a house, you know you're credit is not the best, but honestly are not sure what your credit score is. You have balances on a few credit cards, and you're able to put a little away each month to save for your new home. You think it'll take years before you will be able to buy, but have you really figured out the details? First, by talking to a banker or mortgage broker, they can pull your current credit report which will give you a credit score. This information alone can help determine your ability to buy. If you have a credit score of 395, chances are really good you won't get a mortgage. But in the 620+ range, you could be in a good range to buy, depending on your other factors.

Your household income and debt, as well as any savings you have also play a factor in your ability to buy. A lender will look at your debt-to-income ratio to help determine how much house you can afford to buy.

Also, as a first time homebuyer, there are first time homebuyer programs available based on your income and family size (a family of one is eligible), and/or occupation.

See, while a goal may be to "buy my first home" in the future, it could very well become a reality for you this year. Home prices are stablizing, and interest rates are now below five percent. The last time they were this low was when the housing boom did happen (now 3 years ago)--except home prices are much lower now--in a more realistic range.

If you figure out that you have just a little too much debt to buy a house, then come up with a plan to turn that around--a better paying job, and/or paying off credit card debt, putting just a little more each pay period in to the savings account. The point is to come up with a plan and stick to it--whatever that plan is.

Good luck and have fun with getting your goals together!