The World of Mortgage Blog - According to Kimberly and Cathy

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. 

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.

Mortgage Market Forecast for 2012

Happy New Year to you and your family!

 

Many of you are familiar with Barry Habib of the Mortgage Market Guide – he provides us daily updates on the stock and bond market as well as events happening around the whole that impact mortgage rates.  It helps us tremendously in our efforts to guide our clients in interest rate lock/float decisions.  The following is a summary of his forecast for 2012.  If any of you would like more information we’re happy to talk through this in greater detail.  His forecast is 8 pages long…we’ll try to be a bit more brief.  J

 

Events that will likely affect interest rates in 2012

€        The European Debt situation – This is an enormously important issue for the world in general but it’s specifically interesting for us in the real estate/mortgage industry as it could have a significant impact on mortgage interest rates.  As The European nations continue to struggle, our mortgage interest rates benefit.  As Barry put it in the forecast, “we’re still the cleanest shirt in the dirty laundry”.  As a result, investors looking for a safe place to put their money are flocking to our bonds.  This helps mortgage rates.

€        Unemployment Rate - He forecasts that unemployment will continue “north of 8% throughout 2012” with more gains in the private sector offsetting losses in government jobs.  With little change in this rate, it won’t be a driver of interest rates for 2012.

€        Quantitative Easing 3 (QE3): The Fed is considering another round of QE under the guise of helping to boost the housing market.  When QE2 was announced (in 2010), rates went down on the rumor but once the program started actually went up.  The current rumor is that there is a 50/50 chance of this happening in the spring - So, rates should currently be benefiting by this rumor for another several months. 

€        The Housing Market forecast:

• o        Delinquency rates have declined and they will continue to do so. 
• o        Home prices will likely decline modestly (1 to 2%) in the first ½ of 2012 and then recover in the 2^nd 1/2  
• o        Rental/Investment properties will make up a larger portion of the market in 2012

 

Interest Rate Forecast

€        He sees interest rates moving ‘a leg’ lower in the first part of 2012 as QE3 rumors swirl

€        These lower rates, as we talked about above, would likely quickly reverse after QE3 actually gets implemented.

€        If the Fed doesn’t do QE3, rates will continue to be attractive through the first part of the year, moving a bit higher towards the end of 2012 as the economy picks up.

€        Rates may dip down near 3.5% and rise somewhere in the mid-to-high 4’s in 2012 but not likely higher than that unless inflation starts to spike higher. 

 

We find this whole topic fascinating, but understand that not everyone does…so we’ll leave it there.  If you’d like have a deeper understanding of how any of the issues above may affect the real estate/mortgage market give us a call. 

 

FHA 90 Day Flipping Rule Extended

FHA has officially extended the Waiver of the Ant-Flipping regulations through December 31, 2012.  Here are the formal details……

 

FHA Extends Waiver of Anti-Flipping Regulations Through 2012: | Fri, 23 Dec 2011 07:42
In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration (FHA) Commissioner Carol J. Galante will extend FHA’s temporary waiver of the anti-flipping regulations.

With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, FHA temporarily waived this regulation through January 31, 2011, and later extended that waiver through the remainder of 2011. The new extension will permit buyers to continue to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

The extension is effective through December 31, 2012.  The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions:

-   All transactions must be arms-length (meaning  not related to the seller), with no identity of interest between the buyer and seller or other parties participating in the sales transaction (meaning mortgage and realtors)

-   In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value…..meaning proof of work order receipts.

 

Solutions for Recent "Tightening" in Conventional Loan Underwriting Systems

Happy Thanksgiving to you and your family.  Our entire team appreciates the opportunity we have each day to support you in helping people with their home purchases.   

Quick update on a trend we’re seeing… (and some options to keeping the transaction together)

Within the last month Fannie Mae’s underwriting system (DU) has tightened up on their underwriting guidelines.  This is affecting conventional loans with 5% - 10% down payment with high debt-to-income (DTI) ratios.  While you guys aren’t the lender and don’t necessarily know the nitty-gritty details of the loan, you may want to know some of the ‘fixes’ to this issue so if your transaction is affected you can keep things rolling forward.

 Switch to FHA – Rates are a slight bit lower, they allow higher DTIs and the loan has a provision for  ‘assumability’ for the future buyer (a nice bonus in a rising rate environment)

1. Change-up from your standard mortgage insurance options.  Evergreen has partnered with a couple of PMI companies that have some really creative mortgage insurance options that can lower a borrowers overall monthly mortgage payment.  This gets them back in the game!

 

Let us know if there is something we can help you with.  We’re a creative bunch…!

 

Speaking of which…we added our first two “Mortgage Minute” videos to our blog yesterday.  They are about “Should you Pay Points to Buy down your rate?” and “Three ways to Lower your Closing Costs”. 

Reducing Closing Costs Options

Seattle Mortgage Minute: 

Here are some tips to help you reduce your buyer closing costs:  Check out this video:   

How to Reduce Your Buyer Closing Costs Options:

Ask the seller to participate in paying a portion of your loan fees.  Gift funds from a blood relative are always allowed and lastly, don't forget to check out State Bond Down Payment Funds.

 

Should you pay points to lower interest rate?

Seattle Mortgage Minute.  Are you refinancing or purchasing a home and wondered if it makes sense to pay extra fees to lower the interest rate?  Check out our one minute video on "Should you pay points to lower interest rate?"

  

Jumbo 10% Down with NO Mortgage Insurance!!

First…..73 days till the end of the year!  If you need a quick closing, Team Evergreen is closing “On Time & As Promised” tm

We have staffed up to handle the increase of business.

 

Secondly, interest rates have ticked a little up but still at an amazing 4.00% 30-yr Fixed on FHA  & 4.25% 30-yr fixed  Conv  (4.31% Conv APR & 4.16% APR FHA) 

Lastly, we researched this for anther realtor and thought we’d share.  Maybe it can make a deal for you?

Jumbo financing is available with 10% Down - NO MI

Example:

$800,000 Sales Price

$625,000 Max loan amount on first mortgage.  4.625% 30-yr rate on jumbo loan  (4.71% APR)

$140,000 Loan amount on second loan – rates vary based on credit score.

 

We also have a straight 15% Down Jumbo with NO MI, but the rate is a little higher in the low 5s.  

Call us for details.

Interest Rate Charts

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.

Click Here for the 30 Year FHLMC Rates On 30-Year Fixed-Rate Mortgage Chart

 

Click Here for the 200 Year Historical Rates On 30-Year Fixed-Rate Mortgage Chart  

(Feel free to print these charts and use them with customers.)

 

Please give us a call or email if there's anything we can do for you!

 

 

 

 

Tip Of The Week!

Mortgage Insurance Companies rates vary pretty substantially based on the business that they are trying to carve out.  If your buyer is having a hard time qualifying for a particular home, work with your lender to make sure they are getting the most competitive rate possible on their PMI.  It might make the difference between a deal and no deal.

 

Here is an example we ran into this week:

 

Buyer has great credit, but a bit high debt-to-income ratio and only enough cash for the 10% down and required reserves. 

Solution:  We shopped two different PMI companies and found upfront PMI premiums ranging from 2.15% (of the loan amount) down to 1.44%.  Using the upfront PMI premium vs. a monthly premium got their DTI in line.  We were able to use the money from the seller contributions to cover the PMI and the deal is set to close on the 15^th.

There are still creative ways to work through the changes in the mortgage insurance industry.  Let us know if we can help.