Tax Credits Coming to an End
Posted on | March 8, 2010 | No Comments
I keep hearing wishful thinking from those who are not ready to purchase a home yet that the government will once again extend the tax credits for first time home buyers and those who are either moving up or down in a home (check the rules as not everyone will qualify). For you, there has been no indication that the tax credits will be extended at this point.
For those who are currently looking to buy a home the tax credits will last until the end of April to have a house under contract with a closing day before the end of June. You will need to check with your accountant to make sure you qualify before you count on the tax credit. Your Realtor and Loan Officer have jobs to do and can give you general rules. Your accountant knows your situation and the IRS rules and is the best person to ask to clarify the tax credits.
Limited by the Numbers
Posted on | February 28, 2010 | No Comments
I am always amazed how some people think a loan officer can “just make the numbers work”. I’ve come to the conclusion that maybe that’s why we’re in the mess we are in right now in the mortgage business. The truth of the matter is this; no one should ever manipulate the numbers to make it work. Those numbers are in place to keep the consumer from purchasing more than they can afford and it works if we let the numbers do what they are supposed to do.
What a loan officer can do is show you different options and loan programs so you may fall within the tolerances of the numbers and be approved for a loan. We can also help you find a program that may help you with down payment money or get approved for a different type of loan program. Some are dependent upon income, family size or location but you won’t know unless you ask. Just remember; what we cannot do is mess with the numbers as they will always tell you the truth.
The Good & the Bad about the Fed’s Latest Rate Move
Posted on | February 21, 2010 | No Comments
Anytime interest rates move up most people view this is a signal of the economy getting worse. However, when rates are this low, it’s really a signal the economy is getting better and can withstand higher interest rates. To better understand it, you have to think from an investor perspective. Making 4 to 5 % on any given investment is not a very good long term investment while making 7 to 9 % is a good long term investment. So once rates reach those levels, more investors participate, which means more money is available for lending.
Because of the unexpected move last week by the Fed, (they bumped up the Fed Discount Rate ¼% which is the rate they charge member banks to borrow) the signal is one of confidence that the banking crisis may be close to over. This encourages banks to borrow from one another instead of the Fed. It also signals to the market that the Fed is okay with rates inching up a bit to head off any inflation the recovery may be generating.
Even though it may mean slightly higher rates, it should be viewed as a good conservative move on the part of the Fed to avoid having to hike rates drastically later. This means things are looking up. While waiting to purchase a house will mean missing the lowest prices and interest rates that will be available this year, it is a good thing that the overall economy is starting to show definite signs of recovery. If the time is right for you to buy, now is still the time.
Where to Find HUD Foreclosures
Posted on | February 8, 2010 | No Comments
I recently met with a friend of mine who wants to start looking for a HUD foreclosure, which is a home that HUD (US Department of Housing and Urban Development) now owns due to foreclosure. My friend told me she has seen many websites that let you join free for a week or so and then charge you money to show you the homes. While it may be convenient to rely on a website, you can get this information FREE at Bid-Select.
You can take a look at what is available in the Tennessee areas as well as a few other states in and around our immediate area and at least see what is available. However, before I would bid, I would get a qualified Realtor involved because I have heard having a Realtor’s help when purchasing a HUD property is a must if you are not experienced with this process. The main thing is you can see these properties for nothing and don’t have to join a website to check them out.
Home Loan Modifications
Posted on | January 27, 2010 | No Comments
I have received several calls over the past week in regard to home loan modifications for people that have not been able to refinance their homes due to the loan on the house being more than its current value or the current financial position has changed and they can not longer qualify for a refinance. Every one I have talked to this past week bought their home using one of the older programs; stated income, interest only, no doc, etc. and are all self-employed who have lost about half their income over the last two years and are just now getting back on their feet.
The problem is that lenders don’t lend on what you plan to do but on what you did over the past two years. That means the financials you are turning over to them are most likely the worst you have had in the decade thus a refinance is not an option for you. What you can do is request a home loan modification through the Loss Mitigation Department of the company who is servicing the loan. This is not a slam dunk either as you have to show hardship; loss of job, income, etc. and you do have to qualify for this as well so be prepared to show financials, bank statements, etc. just like you do when getting a loan.
Though this can be time consuming, it is worth the effort of you are in a position where you are really struggling to pay your mortgage. You can also approach the company who is servicing your second and do the same thing. These sometimes go through Loss Mitigation and sometimes not depending on how large the institution is. The key is to stick with it and not let anyone bully you. You are in a temporary situation and that will change in time.
Not Even HUD was Ready for Their Own Changes
Posted on | January 21, 2010 | No Comments
Since the first of the year there has been a scramble to make sure the new regulations and paperwork is rolled out and accurate at every mortgage company and bank. The fines that will be in place and enforced are stiff so these companies are doing everything they can to make sure they comply with the new rules. However, what no one anticipated was the glitches and hiccups from HUD itself.
Though it is true that you cannot anticipate errors and issues in new software, you would think that someone would have thought about a backup plan to issue case numbers and make sure that approved properties were honored until the kinks in the system were worked out. Unfortunately, that didn’t happen and many loans are stalled waiting on HUD to get their act together. They are telling everyone it has been worked out but many are still waiting…
How Employment and Unemployment Affects Interest Rates
Posted on | January 12, 2010 | No Comments
The December employment report came in relatively bond friendly. Though unemployment came in at 10% as expected; the payroll component showed job losses of 85,000 compared to the 35,000 losses that were expected by analysts. Though the mortgage bond market had a generally positive reaction to the report, improvements in rates were tempered by concerns for some of the revised data from prior months. Revisions to the November figures showed a 4000-job increase as opposed to the original 11,000-job decrease.
Employment numbers coupled with other fiscal factors impact interest rates, and while most would think that keeping interest rates as low as possible is the goal, ultimately, it is not. When the economy is rocking at a healthy pace, interest rates are around 8%. Currently, the Fed is doing quite a few things to keep rates low to get the housing market moving along because a healthy housing market, most of the time, is also needed to have a healthy economy. We will all have to wait and see if everything that has been done will actually work to restore jobs and a health economy.
Why Should You Attend a First Time Buyer Class?
Posted on | January 7, 2010 | No Comments
One of the things I hear often asked in relation to THDA and other first time home owner programs is why some of these programs require you to attend a Buyer Education Class. On the surface, it would seem that they just want you to know what you are getting yourself into when purchasing a home for the first time. However, it is much more than that. These classes are designed to not only prepare you for what you can expect but they also want to protect you from making any unwise, knee-jerk emotional purchases that might lead you into financial trouble.
Had many people attended such a class in the early 2000’s we might have avoided the current housing situation but it is far easier to look back than to look forward. These classes are there for you and your family to learn the upside and the downside to home ownership as well as what you will need to have together to qualify for a home. Even if you are not required to take the class, you will be better prepared if you do to own a home. If you don’t have the time to take a class you can read the First Time Homebuyer Guide.
What to Expect During the First Quarter of 2010
Posted on | January 4, 2010 | No Comments
Over the holidays I did some research on what most “experts” (at least that is how they cast themselves) were saying about the coming year 2010 and found a common thread that had to do with what will happen as the government starts to back out of holding the interest rates down as well as helping buyers with tax credits. That common thread was that interest rates will be lowest in the first quarter of the year; that’s now through the end of March. The reasoning is simple, once the government lets the market take care of itself; interest rates are expected to go up.
This may seem like a really bad deal but most economists believe that a healthy economy should have a working interest rate of somewhere between 7 and 8.5%. If were buying a house in the early eighties you would have given your right arm for an interest rate in the 8’s because many of us were paying 12 to16% in that rough economy. As much as I don’t want any of us to go back there I do think it is important to put things into perspective and realize that our economy will not grow unless rates eventually go up to a healthy place. Investors don’t want to invest if they can’t make money so eventually, it has to be a win, win for everyone.
The New GFE
Posted on | December 28, 2009 | No Comments
As of January 1, 2010 all mortgage lenders will be required to use the new Good Faith Estimate (GFE) and abide by the new disclosure regulations that accompany the new GFE. While this is different from GFE’s of the past, it is not designed as a user friendly form for the lender but a form that is friendly to the mortgage customer. Because everyone will have to use the same form, it should be easier for the consumer to understand. I certainly hope this eliminates any comparison questions as all fees, though lumped together, are required to be disclosed for the consumer to see.
Once this form has had the chance to be used for a while, I believe it will be a plus for the industry as a whole. And while it odes some really good things it also makes it virtually impossible to close a loan quickly. Appraisals cannot be done quickly and you have to wait at least 3 days and sometimes up to 7 days after the GFE have been released in order to close the loan. This simply means that loan officers, processors, closers and title companies will have to be on top of their game at all times because the process will no longer allow much leeway. It will be more and more important to get it right and get it right the first time. So whether you are a consumer or Realtor, working with an experienced loan officer will be very important from this point forward.
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