I hope you are all enjoying a happy holiday season and are ready for a great New Year! With 2012 just a day away, undoubtedly some of you are thinking about what the new year will bring… And maybe some of your are hoping to buy a new home in 2012! Let’s take a minute to talk about the semi-daunting but always-important topic of home loans. (Fun, I know, but afterward you can crack open some Champagne.) Mortgage Lender Scott Groves with Prospect Mortgage answered a few questions about changes to the loan process in the new year, tips for how to qualifying for a loan, and how to file your taxes without screwing up the loan process. Check it out.

Take Sunset: There’s been a lot of talk about what a bad year it was in real estate, with the Case-Shiller index showing home prices consistently dropping, but this was actually good news for buyers. And in desirable areas of LA, these statistics didn’t even seem to affect sellers. What’s your take?

Scott: Most economists expect home prices to continue to decline as much as 4% or 5% before leveling off sometime in 2012. And yes, this is actually great news for buyers. As the economy continues to struggle nationwide and we go into an election year, there will be pressure to keep rates artificially low, as they are now. Even if you’re buying in a rebounding area like Los Angeles these nationwide economic struggles will ensure that you get an amazing rate on your mortgage.

Take Sunset: Will there be any changes to the loan process in 2012?

Scott: Rates should hold below 5% throughout 2012 and may even dip below 4%, as they have a couple times in the last few weeks. This should be a major incentive to anyone wanting to buy a home, but we’ve all been spoiled by the low rates of the last 5 years. Just keep in mind that rates will go up at some point in the future and when that happens, buyers can lose about $50,000 of purchasing power per every 1.00% of interest rate increase. The Federal Housing Administration (FHA) loan limits will hold steady at a max loan amount of $729,750, traditional mortgages will have a ceiling of $625,500, and “jumbo” loans of over $625,500 will continue to require 20% – 25% down. Buyers also have to have above average credit scores to qualify for jumbo loans.

Take Sunset: What advice do you have for buyers looking to qualify for a loan in 2012?

Scott: Talk to a lender early and often. Getting pre-approved in advance is crucial for a successful loan closing. If you’ve been previously approved for a loan, do not file your 2011 taxes until a lender reviews them to ensure that your income levels have remained the same or increased since your original pre-approval. Pay-off any credit card debt acquired during the holidays as quickly as possible, but don’t close the credit card after you pay it down to a $0 balance.

Take Sunset: Speaking of tax time, do you have advice for self-employed prospective buyers when they file their taxes? Read more…