February 13th, 2014
The good news is that late payments dropped from 5.08% in Q4 2012 to 3.85% in Q4 2013. The last time the mortgage delinquency rate was lower was 3.61 percent in the second quarter of 2008 according to TransUnion who has been monitoring these rates since 2007.
Most home sellers plan on the standard 5-6% real estate agent commissions when they sell their home. But hwat they don’t plan on are the additional transaction costs that pop up including:
Additionally, home sellers need to budget for any housing overlap costs. For example, if you sell your home and rent an apartment until you buy another place, you have the cost of rent. If you buy a home before you sell your old home, you’ll have two mortgages to pay.
The new underwriting criteria that went into effect January 10th of this year required a debt-to-income ratio of less than 43% for most qualified mortgages. There are alternatives, and to find out additional ones, talk to a qualified mortgage loan officer.
Two alternatives are rent-to-own and contract-for-deed. These have some variations depending upon state rules and the contents of the legal agreement. Generally speaking, lease-purchase means that the buyer rents from the owner for a set period of time after which the buyer agrees to purchase the property. The tenant may pay extra money each month towards equity in the home. There are variations such as lease-option which gives the renter the option rather than the obligation to purchase.
A benefit is if you’re close to being qualified for a mortgage,but not quite yet, you can rent the house of your dreams until you’re ready to be approved for the loan. And it could lock in a price today rather than the worth of the home in a year which may be more.
There are downsides, obviously. One of them is that the overall cost could be higher than a traditional mortgage and can lead to some predatory lending practices.
The transactions can get extremely complicated if one party decides to drop out.
And, there could be title issues. The purchaser should hire someone to do a title search to verify that the landlord is really the owner and has the ability to sell the property.
As always, have a good support team to help you with these decisions.