The World of Mortgage Blog - According to Kimberly and Cathy

Some Nifty Charts On Historical Interest Rates!

We hope these charts provide food for thought for anyone wondering if now is a good time to get off the fence regarding a home purchase or refinance. They are all really good charts but the
last one is a great example for the first time home buyer. 

 

 

Financing Options To Hold Together A Deal On A Distressed Property

Good afternoon – We know there are some homes out there that are less than perfect.  Here are some options available for working through DISTRESSED properties:

1.         Easiest option – FHA 203K Streamline rehab loan.

-Get some bids, up to $31,500.  Have the appraiser include it in the value, and add it to the loan amount. 

-Work done after closing.

2.         Another easy option – FHA loan appraiser calls out some work.

-Add the cost of the work into the loan.  Work can’t be more than $5000 and the home must appraise high enough to cover the additional cost.

-Work done after closing. 

3.         Escrow Holdback – only works for cosmetic issues.

-Get three bids and we hold 1.5% in escrow. 

-Work must be completed shortly after closing.

4.         A full 203k (rehab) is another option and they can borrow up to the FHA loan limits in your county.

-Must keep the existing foundation – but the project can be major in scope if needed. 

-If you’ve got a huge construction issue/remodel/repair consider a construction loan. 

-Usually requires 25% down on the home price and funds 100% of the construction cost.

-Buyer can do the work themselves.  Pays monthly interest only payments on the amount drawn.

 

We’re trying to keep this short and sweet so if you have any questions on any one of these options give us a call/email.  Have a great day!

New Home Sales Chart & Mortgage Info!

Download New Home Sales Nov 2012

Above is a recent chart showing the increase of New Home Sales.  Feel free to share with your clients.

On a good note:

HARP Refinances dropped 18.5% in October even with record low rates.  This will be beneficial to all your purchase transactions because you won’t have as much competition for closing with fewer refinances in process.

Side Topic:

Will the Mortgage Forgiveness Debt Relief Act of 2007 be extended by Congress by the end of the year?  If not, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction. That means if someone owes $150,000 on their home and it sells for $100,000 in a foreclosure auction, they could owe taxes on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure. Similar taxes would apply for amounts that were forgiven in short sales and principal reductions." Attached is the link.  Enjoy the read.

What Can You Do With 2nds?

Today we’ll give you a quick reminder of how you can put 2^nd mortgages to work for your clients to save them some money.   It’s been close to 5 years since the market soured on this loan product….and Evergreen has it back. 

 

Let’s say your client is purchasing around $300,000.  The options with 10% down (for example) would be:

• FHA 10% down – monthly mortgage insurance would be around $270
  • Monthly payments for JUST the P&I + MIP would be $1,346 – rate of 3.25% (APR 4.10%)
  • Conventional with 10% down – monthly mortgage insurance would be around $110 monthly
    • Monthly payments for JUST the P&I + PMI would be $1,201 – rate of 3.5% (APR 4.21%)
    • Or – the new 2^nd mortgage option.
      • Monthly payment on the 1^st and 2^nd loan only –
        • 1^st - $969/month - rate of 3.5% (APR 3.86%)
        • 2^nd - $142/month – rate of 4.84%
        • Total payment of $1,111 AND a savings of about $90 over the next lowest payment. 

 

Then, just for fun.  Assume they are okay with spending that extra $90/month in payment – that would allow them an extra $20,000 in purchasing power. 

 

A few of the 2^nd loan guidelines:

700 credit scores minimum – and no bankruptcy/foreclosure in the last 10 years

Owner occupied properties only

Max loan amount of $350,000

Max combined loan-to-value is 89.99%

Available for Purchase, Refinance AND Cash out refinances

 

Have You Felt The Shift InThe Market?

In our continuing effort to keep you updated of what we’re experiencing on the lending side of life, we want to alert you on APPRAISAL turn times. 

Certain segments of our markets have heated up for purchase business (Yeah!) and at the same time many lenders are really pushing the HARP 2.0 refinance loans…this is causing delays in appraisal inspection dates.  Where we used to get an appraisal accepted and scheduled the day we ordered it – it’s taking upwards of a week these days.  Additionally, because they are so busy, they are taking longer to write the appraisals up and submit them back to us. 

The latest “HOT ISSUE” for loan buy backs revolve around appraisal issues.   In appropriate comps, improper adjustments, overlooking property issues…that kind of thing.  Appraisers are feeling the heat and have to be more careful than ever.

If you can give us (or your current lender) a little extra time to get through the loan process, that would certainly be welcome. 

Focus On Listings!

Happy Friday

Yesterday Evergreen Home Loans celebrated our 25^th Anniversary with a little campaign and… reflection!  Each year has its own challenges.    Right now it’s LACK OF GOOD INVENTORY for you all to sell.  

The owner of our company, Don Burton said that as a young realtor in the 1980s he didn’t know anything about why high interest rates would make it difficult to sell homes.  He had a strategy for focusing on where the business is and letting the rest go: 

“Pick up the Quarters and Dimes… Leave the nickels and pennies”

The “Quarters” right now are listings:

• Sellers that have equity in their homes
  • Check out neighborhoods that have had recent sales that bring values back up.  One of the guys in our company bought a home at the height of the market in a new neighborhood.  Values have of course dropped since then, but recently a home sold in the area at a price comparable to about what he bought his home for….don’t you know, a couple weeks later 2 more ‘for sale’ signs popped up in his neighborhood.  Be that listing agent.
  • Divorces – align yourself with a family practice attorney or two.  Their clients will likely need to sell their home.
  • New Babies/recent marriages – talk to your past clients.  Whether it’s them, or their kids/friends kids someone might need more space. 

While many lenders are focusing on the new HARP2.0 loan right now,  we’re focused on our purchase business…last year it was 82% of our closings.  Let us know what we can do to help you. 

Rates are still ridiculously low, with no signs of reversing that trend.    

Would a GUARANTEED loan from us help get your buyer's offer accepted?

Back in the ‘Old Days’, circa 2007, we always used Evergreen Home Loans “Security + Loan Guarantee” which, in a nut shell says that If for any reason, Evergreen Home Loans fails to close the loan we will pay the seller $1000!  This loan guarantee is subject only to an acceptable appraisal and title report.   Our buyers had a leg-up on the competition when it came to multiple offer situations. 

 

As bank owned homes and short sales took over the market we moved away from this powerful tool.  But we’re pulling it off the shelf! 

 

When it’s a seller’s market, you’ve got to make sure your buyer looks as strong as possible.  Sometimes the highest priced offer doesn’t win the bid…it’s the one the seller and their agent KNOWS is going to close.  

 

Here’s how it works:

• Buyers supply ALL of the required documentation
• We run the complete loan file through our underwriter (not the automated system, but through Judy our underwriter)
• She reviews and signs off on the entire loan file (sans the appraisal and title report)
• You get the guarantee to accompany your offer.
• The seller knows that you have a strong buyer, so YOU get the offer accepted
• We CLOSE FASTER! No hiccups, no mess!

 

It takes about 5 business days to run through this process but the benefit in the end is priceless.  Let us know how we can help. 

Fun Facts about the Real Estate/Mortgage Market

In 2011 investors purchased 1.23 Million homes.  This is up 64% from 2010.

• Investment purchases made up 27% of all the activity in 2011
  • ½ were cash purchases. 
  • ½ were distressed homes
• In a recent survey by Transunion, a troubled homeowner is more likely to let their house payment slip BEFORE they are late on their auto loan or credit cards! Yikes!
  • 9.5% of the troubled homeowners were late on their auto loans and 17.3% were late on their credit cards
  • 40% of them were late on their mortgage.
• In January, more short sales were closed than foreclosures.  This means the banks are agreeing to more deals – good sign!
  • Short sales accounted for 24% of sales
  • Foreclosures accounted for 20% of sales
• The average loan closed in March has a FICO score of 749, and LTV of 77% and a debt-to-income of 35%. – that’s a nice loan. J
  • The average loan denied was a FICO of 699, 85% LTV and a DTI of 43% - this is surprising. 

 

What’s Driving Mortgage Interest Rates?

Mortgage Rates continue to remain low – here’s why. Various European countries continue to struggle with their debt. As they do, US Bonds look more appealing to investors…as they’ve got to park their money somewhere. Mortgage rates benefit when investor’s flock to our bonds. This is likely the largest factor influencing our low mortgage rates these days. When will rates go up: when Europe looks stable and the news comes out that their debt issues have been resolved. Inflation (officially) remains in check. When will rates go up: If (when) inflation takes hold. Those bond holders (holders of mortgage debt) will want a better return on their money once inflation cuts into their margins. Rumors as still swirling about additional Quantitative Easing (QE3) – This is when the Fed buys up mortgage debt. The possibility of this happening keeps mortgage rates low. If the Fed rules it out completely, rates would likely move up.

Financing for Condos, Non-Conforming Condos and Condotels

Financing for Condos, Non-Conforming Condos and Condotels

“Normal” Condo Financing:

€        For new construction/conversion: 70% of units sold or under contract for owner occupied/second homes

€        Existing Projects: NO owner-occupancy ratio requirement if purchasing as an Owner Occupied/2^nd Home. If the subject property is an investment purchase then the owner-occupancy requirement is 51%.

€        100% LTV – through USDA

€        95% LTV – through conventional loan

€        96.5% LTV – through FHA – condo project must be FHA approved

€        Rates are at current market (except conventional loans that have an additional Fannie Mae charge of .75% of the loan amount for condos over 75% LTV)

Home Path Condos

€        If property is classified as a Home Path property, no condo certification or appraisal is required.  So, none of the condo requirements above apply.

€        Rates vary by LTV and credit score

Non-Conforming Condos

€        Defined as: Less than 51% owner occupancy on an investment purchase, over 10% of the units held by one entity, greater than 15% HOA delinquency, some litigation

€        Minimum Loan amount $300,000

€        Max 60% LTV

€        Rates in the 5’s.

€        3 year, 5 year, and 7 year ARMs only

Condotels

Evergreen Home Loans can help under these scenarios:

€        Minimum Loan amount $300,000

€        Max LTV 50% (60% on a case-by-case basis) – so price on the condo would have to be $600,000.

€        Interest Only possible