US Home Value Continue to Fall

The financial net worth of homes and of individuals in the United States has decreased dramatically to $ 66,740 in 2010 from the $102,844 from 2005. The Census Bureau has recently realized the crisis that is currently facing the nation, according to their findings: there has been a 35% decrease in the net worth during the years between 2005 and 2010.

These findings also pose as warning to the financial status of many US citizens for their total capitals have fallen. The cause of this decline is not a mystery at all to the agency. These causes are the tremendous economic depression that occurred in the nation in 2008, and rapid increase in the total number of households in the nation.

The prices of houses have declined in the market and this triggering economic turmoil such as problems in banks to massive unemployment of citizens. In fact, the cost of owning a house is cheaper compared to debt in mortgages and loans; the value of stocks and other assets have also fallen behind housing.

The census of the government was able to measure the problem in numbers; however there is another report from the Federal Reserve whose findings are opposed to the data they gathered. The data exists for about a year and a half now, but they include the problems that are hovering over the investors and consumers.

According to CoreLogic, 11 million of the mortgages and that is equivalent to twenty three percent of the loans in homes in America are charged with fees above the real value of the house. The value of stocks however, has been a little better compared to how it was in 2010.

The Survey of Consumer Finances which is released by the Federal Reserve in three year intervals contains the latest analysis of the finances of families in the country.

Rent to Own, Lease Option to Buy Gives Buyers Time to Improve Credit

ReMax True Advantage’s agent Ezell, has been working with various clients pertaining home loans and provided them with great deals with reasonable prices. According to her, the current financial crisis prevents people from buying houses, but with the new rent-to-own terms, they have both the time to clear their credit and own a house.

The houses that Ezell sells allows the client the right to refuse to purchase the house they will rent, they will be required however, to pay an option fee which is 2 percent of the total price of the house if ever it were to be bought.

The number of houses sold is now waning compared to the last two years. Most of the landlords that Ezell deals with are very much willing to sell their properties but due to the fact that there are too many homes in the market and very little interested buyers, leasing the property is their best option at the moment.

Aldo Aguirre a military member, is selling homes and also open to rent to own terms. According to him, it is beneficial for military members such as himself to rent to own a house. His job requires him to move from place to place and he must rent or sell his house once he is based elsewhere.

He currently owns a house in North Carolina under a rent-to-own deal, he says it has been very beneficial for himself and his buyer. The contract expands within 2 years and both parties would have to agree on a price for the house for its expected market value after 2 years’ time.

In these terms, Mr. Aguirre is getting payments from rent which takes care of the house’s mortgage and at the same time, the client takes care of the lot. The rent-to-own contracts are very popular to a buyer who are interested to buy a house but currently lacks the financials to purchase it.

Get a FHA Loan and Get Your Dream Home

The federal loan of the government was intended to give citizens the finances they need to get a house despite their low salary and bad credit. Banks would often deny these people‘s request for loan due to the fact that they are unsure if they would be able to pay back loans.

FHA mortgages are one of the government’s ways of helping these potential clients to get loans in financing their everyday necessities. But since the United States had suffered from a recession in 2008, the project was greatly affected and not all of potential clients were able to qualify for the program.

So how does one know if he or she is an eligible candidate for the FHA loan? Well first, let us review why the program was initiated. The Federal Housing Administration is a project headed by the United States Department of Housing and Urban Development. In 1934, the program was initiated to prevent home lenders from being broken due to a home renter’s inability to pay rents on time.

This program allows the government to intervene in the customer lender mortgages if the client goes default in his or her payment. The program has been effective in its function and it now has about 34 million mortgages that it has settled over the 78 years of its existence.

But this started to get harder when 2008 came. The FHA loan was harder to qualify for since the agency had to be stricter to their customers. But now since the economic crisis is finally starting to lift off again, the FHA is starting to approve mortgages again but not all banks are willing to go with the approval even if the individual fulfills the minimum requirement of the agency.

But what are the guidelines that must be comply by the applicants? First, the credit score of the applicant must be at least 580, those who have scores in between 500 and 579 the agency will give a mortgage of 90 percent or lesser of the total price of the house.

The Effect of Your Spouse’s Bad Credit in Buying a Home  

After getting married with a spouse having a bad credit, does it stop you from buying a house with your good credit record? The answer is “no” because your plan to buy a home you want is still very possible or within your reach. Before you castigate your spouse for ruining his credit, take note that after the severe financial crisis in 2008 only few Americans were greatly affected by the credit crunch. In fact, many American families are uncertain about their financial situations. In other words you are not alone in such kind of situation.

Tips to buy a house with Bad Credit

It is not only you and your spouse who are struggling to buy a house because of bad credit. Here are some options you can choose from when your spouse’s credit is not desirable.

1. Buy the house together: If you buy it together, you can set aside the bad credit of your spouse. This is an option which will charge you high interest rate and no financial expert would advise anyone to choose this option but this is just one way for you to buy a house.

2. Buy it alone: If your spouse’s credit is bad but yours is good then buy it using your own credit. This will be easier for you to get a loan because of your good credit record. The amount of loan will be based on your income and available cash.

3. Loan granted with no verification of income: This is an option where the single income of the one who has a good credit record or the bad credit record of the participating spouse are not the basis for granting the loan. This type of loan, however, requires a large down payment ranging from 25 to 30 percent of the principal. The bad news is this option eliminated because of the financial collapse.

4. Replacement of “Bad” Credit with “Good” Credit: A third party can help a couple to buy a house. Usually one of the parents with excellent credit rating can replace the spouse with a bad credit. The third party is required to co-sign the couple’s house loan.

Bad Credit? No FHA Loans for You

Mortgage loans from the Federal Housing Administration will be discontinued for clients who have unsettled their credit history starting July 1 of this year. This new regulation from the agency will be a safety measure against people who might be unable to pay their loans due to several debts like from credit cards, health related bills, car loans and other liabilities.

This policy will force clients who have not paid their dues of $1,000 or above to clear out their current liabilities first, which is very crucial. The company was supposed to adopt the policy starting April 1 but the date was moved.

However, clients who have been proven to be victims of identity theft or scams will be exempted from the new rule. Those who suffered financial crisis due to emergencies, accidents, joblessness and divorce may be given a loan provided they issue a waiver to the FHA.

This policy may decrease the number or qualified clients to a loan, however it is an action that the agency must take in order to prevent the further collapse of the housing business.

Though this new regulation will be beneficial for the housing businesses, it will not be so beneficial for about 35% of clients who are suffering from financial crisis. This is based on a 2011 study that reported 1 out of 7 citizens are struggling to pay their bills on time, furthermore about 27% of student aids given by financial intermediaries are not paid past the 30 day dude.

Even if financial and economic crisis hit, you should not be taken aback nor be demoralized. You should not allow debt to further ruin your life, take measures to improve your financial standing.

These are the ways you can do that:

Attend the credit seminars given by the Consumer Credit Counseling Services. This will show that you are making the effort to rehabilitate and alleviate your credit status.

Pay off your current balances and update your records. Paying debts will not be enough. It is important to monitor your credit history, in case errors have been committed.

Keep caution, more and more individuals are taking advantage of people who plan to rehabilitate their credit. There are some agencies or people who offer to fix your credit score for you in exchange of a very high amount of money, but these deals often end up as scams and the credit remains unchanged.

Always remember that there is no shortcut to success. Recovering from bad credit requires hard work and perseverance. Train yourself to be financially wise; learn how to plan and follow that plan in order to succeed.