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Joe Metzler

How to respond to Low ball Offers

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When selling your home, there is a good chance you’ll get a low ball offer.

Before you blow a gasket with a an outright rejection, take a deep breath and understand why.

First, it almost without fail has noting to do with your home, its condition, or your asking price.  It simply has everything to do with buyers thinking it is still 2009. Thinking you are a desperate seller, that they can low ball offfer, and that you’ll accept the offer. Buyers believe it is always worth trying a low ball offer.  The reality is a real estate agent has priced your home correctly, and that almost all homes sell today within just a few thousand dollars (up or down) from the asking price.

house_from_wordRemember that receiving a written offer means that there is a buyer who is seriously interested in purchasing your home. By holding your emotions in check, and responding with a counter offer, you may well turn that low price offer into a sale.  You, with help of your real estate agent, just need to move forward with a bit of strategic negotiation.

Your goal is to sell the house, and sell it at your asking price. Their goal is to buy your home at the lowest possible price.  Put your emotions away. It is a business transaction.  By simply keeping negotiation alive with a counter-offer you’ll almost always sell the house at a number comfortable for both buyer and seller.

Every situation is different, but, in most cases, the best negotiation strategy is to determine a price and terms that you are willingly to accept and respond accordingly. This may mean lowering your price and removing any seller concessions (such as paying closing costs) or it may mean sticking to your asking price, but giving in on a few of the buyer’s requests (such as leaving behind the appliances).

As a MN and WI based Mortgage Loan officer, I see that many of my buyers NEED the seller to pay closing costs. This term is very misleading, and many sellers are annoyed at paying the buyers closing costs. But remember, you are NOT really paying their closing costs. It is simply a way for the buyer to roll the costs into the loan. FOCUS on your bottom line, and don’t be concerned about paying the buyers closing costs.

Underwaters homes dramatically lower

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Minneapolis, MN: Since the real estate market collapse, many home owners found themselves owning much more than their home was worth on the fair market. This created many problems, from the inability to sell and move, foreclosure from the inability to sell, and a hard time refinancing because of the lower value.

Homes for sale - real estate - MinnesotaThe housing market has been slowly climbing up the ladder, and according to a report from Zillow, the share of homes underwater has now dropped to under 20%

The same report stated that the underwater rate is currently about 19.4% of all homes. This is an improvement of about 3.9 million homes going back above water in 2013.  This is down from about 27.5%  of all homes underwater in late 2012.

As values increase, millions of people who may have had a pent up demand to move, but couldn’t, now suddenly find themselves once again above water.  More people are likely above water than actually realize, as many people rely on county tax statements for their value estimates. But tax value and fair market value, or what you could actually sell the home for, are many times two dramatically different numbers.

I advise anyone thinking of selling, to contact a local Real Estate Agent to get a fair market assessment of their home, and to contact a mortgage broker in their area to see what they would qualify for in a new home, or to see about refinancing.

The market is expected to slowly continue the climb towards a more balanced market, with the report estimating the negative equity of homes nationwide to drop even further, to just 17.2% by the end of 2014.

Tips to getting a better mortgage loan

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Minneapolis, MN:  Tips to getting a better mortgage loan are all over the internet, and everyone seems to have an opinion. When buying a home, almost everyone is going to need to get a mortgage loan. So knowing the tips of where you get that loan can effect service, programs, rate, cost, and more.  Here are a few tips I suggest understanding:

So where to get a mortgage?

Banks, brokers, credit unions, and mortgage companies all offer loans in MN.  Most offer the exact same loan programs, but not everyone offers everything.  For example, it is fairly common for small banks and credit unions not to offer FHA loans or VA loans.

keyTips when getting a mortgage loanHistorically many people start with what I call their place of comfort. That is almost always whatever institution has their checking account. There really isn’t anything special here, but many people call it “their bank”, and wrongly believe because you have an account there already, you’ll get a better deal.  Sorry, but that simply isn’t true.

Since the age of the internet, a web search for a mortgage company is another popular starting point.  You’ll find a wide range of banks, brokers, credit unions, and local mortgage companies. There is nothing wrong with searching the internet for a mortgage company, except you need to understand that some out-state lender or the big internet companies names you see on TV CAN NOT offer you anything better than the local lender down the street.

Finally, about half of all people when buying a home simply use the mortgage lender the Real Estate Agents suggests.  This is where I believe so many  home buyers make a fatal, and expensive error.

Beware of Realtor In House or Preferred Lenders

When your Real Estate Agent suggest a lender, there are two types.

In House or Preferred Lender: Generally these companies are either owned by the real estate company, or have some kind of official partnership.  Many times they have similar names.  XYZ Real Estate sending you to XYZ Mortgage, but not always.

The Real Estate Agents work very hard to drive you to the in-house financing for a simple reason. They make money doing so.  No matter what they say about convenience or anything else, it is all about making more money for their company.  As you can imagine in this situation, you are generally NOT going to get the best deals in the market. Furthermore, just because they are the Real Estate Companies preferred lender, doesn’t make them good.

Outside Referral Partner: Generally speaking, these referrals companies do not have any sort of official relationship with the Real Estate company the agent works for.  The Realtor is referring you to this Loan Officer simply because they have proven to have the knowledge, expertise, and the programs the clients need and want. The Loan Officer has proven themselves to be a great referral partner. The Real Estate Agent and the Real Estate Agents Company are making nothing extra when you select this lender. The agent and their company has no financial gain. Their only interest is based in you getting the best possible deal for you (not their company) and having someone they trust on your side.

Another tip? The worst referral partners… Builders… But I’ll save that for another article.

Choosing a Loan Officer

The first big thing to understand is about the Loan Officer you choose.  You want your largest financial transaction handled by an experienced professional.  So look for someone with well documented industry experience. I suggest at least 10-years at a minimum.

Next, realize that Loan Officers at depository lenders (banks and credit unions), and mortgage companies owned by a bank or credit union, are NOT required to have a license, are NOT required to have any schooling, and DO NOT need to pass any state or federal testing.

Loan Officers at non-depository lenders (brokers and direct mortgage companies) ARE REQUIRED to have schooling, continuing education each year, and pass stringent state and federal testing requirements.

I’m not saying any one individual Loan Officer is better or worse, but face it.  I would prefer a licensed person versus an unlicensed person.   So how do you know if your Loan Officer is licensed? You don’t unless you ask or check through the national loan officer database.  All Loan Officers must have a tracking number known as an NMLS number. Don’t be fooled, an NMLS number is NOT a license number.

Giving the two choice of referral partners, and knowing what you’ve just read… Which one would you choose?

 

Down Payment Assistance Programs in MN

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DOWN PAYMENT ASSISTANCE PROGRAMS

MHFA Start Up and Step Up down payment assistance programs in MN for First Time Home Buyers

Have $1,000?  Have OK Credit?  Than YOU can be a homeowner.

down payment assistance programs mnThe biggest hurdle for many first time home buyers is the lack of down payment money.  With the down payment assistance programs from the Minnesota Housing Finance Agency – you can buy a new home today, and be enjoying it next month!

TWO MINNESOTA DOWN PAYMENT ASSISTANCE PROGRAMS

START UP Program

The Start Up assistance program is for people who have NOT owned a home in the last three years.

STEP UP Program

The Step Up program is for people who currently do, or may have owned a home previously.  Both of these program assist with up to $10,000 is down payment assistance to those who qualify.  Most people get much less. Typically up to just $5,000.

MORTGAGE CREDIT CERTIFICATES

By adding a Mortgage Credit Certificate option, first time home buyers can potentially save up to an addition $2,000 on their taxes.

Click or call to learn more about the benefits of mortgage credit certificates in MN (MCC)

 WHO QUALIFIES FOR DOWN PAYMENT ASSISTANCE?

As with any assistance program, there are additional rules and guidelines that need to be followed.  Here is a basic list of requirements:

  • Credit score above 640 (middle score of all applicants)
  • Attend Home Buyer Education Class or take the online class
  • Meet family Income Limits
  • Buy an affordable home
  • Provide previous three years tax returns
  • Meet FHA, VA, USDA, or Fannie Mae / Freddie Mac underlying loan guidelines

The rules and guidelines for first time home buyer and down payment assistance programs in MN are a bit overwhelming for most potential new home owners.  We suggest you don’t try to figure it out yourself…  Rather, simply call us at (651) 552-3681, or fill out a full online application. Our licensed professional Loan Officers will review the application, zero in on the best loan for you, then contact you to discuss your options, all with NO COST and NO obligations whatsoever.

Click here For FULL RULES and GUIDELINES on the Minnesota Housing Finance Agency Down Payment Assistance Programs

Refinancing after a bankrupcy

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Q: Do you have to reaffirm your mortgage with a bankruptcy to refinance the mortgage loan today?

Minneapolis, MN:  I hear this question on a fairly regular basis, and the plain and simple answer is NO.

You DO NOT need to reaffirm a mortgage loan that was in a bankruptcy to refinance that loan today. Anyone telling you otherwise is 1000% wrong.

refinance mortgage bankruptcy affirmation reaffirmationIf you did not reaffirm your mortgage during your bankruptcy, the mortgage did not disappear. It is still a lien on your house.  It is still owed and must be paid unless you are willing to risk losing the property.  The mortgage company — the servicer — virtually always wants you to make these payments.  And they often don’t care about the reaffirmation and will not waste their time (and your money) asking for it during the bankruptcy case.

If you pay, you get to stay

If you don’t pay, you will be foreclosed on and have to vacate the house.  The bankruptcy will protect you from ever having to pay any loses ON THAT LOAN.  But if you sign and take out a new loan, it is a new debt, a new loan, and the previous bankruptcy protection from the old loan is gone.

The problem new lenders have is because of the bankruptcy, the current lender is no longer reporting your payment history to the credit bureau.  A new lender is required to get a current payment history, and that can sometimes be very difficult.

The Loan Officer is Wrong!

With that said, some lender want you to reaffirm.  Sort of stupid, but that is up to them…  Not every lender feels the same way. Plenty of Loan Officer are also simply wrong in saying you need to reaffirm the loan first. If you are talking to someone telling you you need to reaffirm to refinance, call a different lender.
If you in this situation for a property in Minnesota or Wisconsin, we can help you.  Just apply online or call (651) 552-3681

 

2013 Home Value Gains Best in 8-yrs

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2013 Home Value Growth Best in 8-years

First Time Home Buyer programs MinneapolisA little real estate history lesson… In most areas, home prices peaked around 2006, started crashing in 2007, bottomed out in 2009,  held steady through 2011, and have grown since 2012.  The recently finished year of 2013 saw annual home value gains the highest since 2005, according to a newly released report.

CoreLogic’s Home Price Index indicated sales were up 11% year over year in December. This also meant it was the 22nd consecutive month of year over year price gains nationally.

Rising home prices should allow more people to sell their home without being underwater, which should allow a lot of pent up supply, and continue to increase home values for even more recovery in 2014.  After a wild ride, it appears we are finally on a well defined housing recovery.

Home prices are expected to continue their year-over-year climb in January, with a projected 10.2% increase from January 2013.

If you’ve been thinking of selling your home.

Now would be a great time to connect with a local real estate agent to see what you home might sell for.

If you are thinking of buying a home

Now would be a great time to buy before home prices rise any further, and while mortgage interest rates are still historically low.

2014 Interest Rate Predictions

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Minneapolis, MN:  It has come that time of year again where I make my mortgage interest rate prediction for the coming year. My long range forecast is based on multiple indexes, theories, past industry experience, and a little bit of guessing. The bulk of the weight this year goes towards the continuing reduction in the easing of the current Federal Reserve bond buying program, which started this month.  If the economy falters, and the Fed delays their easing, the anticipated increase in rates could be pushed back.

Below is my prediction for the average 30-year conventional fixed rate mortgage loan:

Month / 2014
 Rate
January 4.875%
February 4.750%
March 5.080%
April 5.200%
May 5.300%
June 5.400%
July 5.500%
August 5.550%
September 5.625%
October 5.750%
November 5.860%
December 5.875%

 

Mysteries of your credit report

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As a Mortgage Loan Officer, everyday I review credit reports and advise clients of the myths and mysteries of their credit. Here is a list of some of the most common items I see and deal with daily:

1. Inquiries lower your credit score. There are two types of inquiries. One is “soft”, where you pull it yourself. This has no effect. The second is a “hard” inquiry, when a lender reviews your report.  It has really no effect UNLESS you have a lot of inquiries in 90-days most recent to the inquiry.  Then it may have a very minor effect on your overall score.  For 95% of the people 95% of the time, having someone look at your credit report means nothing.

2. Income effect score: The credit bureau does not consider income. They have no idea if you make a million a year or no job at all. .

3. Close credit card is smart. Maybe. But be careful. You have to have credit to get credit, and part of your score is longevity. On time payments on a card you’ve had for 10-years is much better than on time payments on a card you’ve had two months. The credit bureau will tell you they like to see a well rounded person. A mortgage, a car loan, and a few credit cards is what they think is perfect.

4. All credit scores are the same. There are three major credit reporting agencies (Experian, Equifax, and Transunion). They use similar, but use different algorithms to calculate your credit score. There are different systems for different vendors. For example, mortgage scoring is different than car loan scoring.  To make it worse, most of the online providers of credit scores use something known as an Advantage score, which is a different score than your lender obtains.

Credit cards and Credit Scores5. Paying bad debt fixes your credit. Paying collections and charge off’s is always better, but paying them doesn’t make them go away. They still occurred, so they can still hurt. Standard late payments remain for up to 7-years. Bankruptcies and foreclosures remain for at least 10-years.

6. My bad credit hurts forever.  It can effect you for awhile, but time can heal the damage. Make sure you have no more new negative items, have some current credit, make sure you pay the credit on time, and keep credit card balances very low.  Doing these items will repair even the worst of credit in just a few years.

8. Max’ed out credit cards I pay off monthly helps builds credit. Wrong – and big time wrong. Whatever balance is on the monthly statement is what gets reported to the credit bureau. This makes it look like you always carry a high balance, hurting your score. Find out what day of the month your bill is generated, and pay it off a day or two earlier. This way it looks like you carry little to no balance each month.

9. Disputing negative information is smart. Maybe. If it is legitimately wrong, by all means, dispute it. Disputing is what most credit repair companies try when promising to clean up your credit report. But lenders are getting smarter about the tricks. An unpaid disputed item on your credit report can now cause you major problems when applying for a mortgage loan.

10. All late payments are reported. You may pay a late fee, but generally speaking, a late payment isn’t reported to the credit bureau unless you are over 30-days late.

Follow this link for more information about your credit scores.

Foreclosures at 5 year low

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Foreclosures at 5 year Low in 2013, but Some States Still Increasing

Foreclosure Minneapolis, MNMinneapolis, MN:  Is it finally over?  With foreclosure filings throughout 2013 reported by RealtyTrac to be at the lowest annual level since 2007, one might begin to hope the housing crisis has ended.  However the company also reports that overall foreclosure activity increased last year in 10 states and scheduled foreclosure auctions in judicial process states were the highest in three years.

READ THE FULL STORY

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Mortgage rates – Should I Float or Lock

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Float or Lock your Mortgage Loan Interest Rate?

Minneapolis, MN:  I get asked the should I float or lock question many times every week, and I generally have the same answer. Lock.

Watching the markets, and trying to figure out what the markets will do is an exercise in futility. There are simply too many reports, commentary, and data constantly being analyzed from every angle and perspective. The last 10-years, much of the talk has not matched the actual trading of bonds.

Interest rates change daily

During the time most home owners are in what lenders call a lockable position, which generally speaking, this means the timeframe after you’ve signed a purchase agreement, and about 10-days before your closing. You can’t lock a rate until you have the exact house, and eventually the lender has to finalize your approval and send out documents for your closing.

Mortgage Interest Rates Minneapolis, MNMortgage interest rates are likely to move up and down many times during this lockable period, which is usually 60-days or less. Rarely do we see rates make big moves, rather just small moves of 1/8th to 1/4 percent higher or lower during that period.  A typical example week may be something like 4.625% on Monday, 4.75% on Tuesday, 4.625% on Wednesday, 4.50% of Thursday, and 4.625% again on Friday.

Now if we KNEW what rates were going to do, we could easily just lock on this example Thursday. Unfortunately, no one has a crystal ball, and no one knows what mortgage rates are going to do.

Therefore my float or lock advice is to always lock your rate the moment you are able to lock, and never look back.

If you lock:  You are OK with where mortgage rates are today, and how they relate to your loan payment.  You are all done with this part of the home buying process, and don’t have anything to worry about. You can focus on other aspects of your new home. While rates may go down before you close, generally speaking it might only be 1/8th percent.

If you float: Mortgage Rates can go up, or rates can go down. If they go down, great – you win.  If they go up, you lose. While rates may move before closing, generally speaking it is rare to see it move more than about 1/8th percent before closing.  Sure, you would like a little lower rate, but you are stressing yourself worrying about rates.  If 1/8th to 1/4 percent makes that much of a difference, you are probably buying a house you really can’t afford.

No one knows what interest rates are going to do. Lock, be happy, and don’t worry about it.

Millions of homeowners gain equity in 2013

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Minneapolis, MN:  2013 was a pretty good year for the real estate market. According to CoreLogic, an estimated 3 million homeowners regained significant equity during the year remarkable year.

Real estate home values in MNThe increase in equity has many positive effects.

First, many more homeowners are now in a position to sell their home without taking a (big) loss. There has been some huge pent up demand for many to sell their home and move, but just couldn’t.  The next effect is that many more people are able to refinance to take advantage of current mortgage rates to either lower their existing loan payments, or to take cash out to repair or improve your home, or pay off other debt.  Finally, these people just simply feel better about their financial situation because they are no longer underwater. Higher consumer confidence leads to people willing to spend money, which has an obvious value to the economy.

According to the report, around 65% of homeowners have either no mortgage, or have at least 20% equity in their homes. Unfortunately, this still leaves an estimated 6.4 million homeowners who have real estate in a negative equity position. Experts point out they expect values to continue to rise in 2014, but likely at a slower pace than 2012 and 2013.

Interested in knowing what your how is worth?

Get a free estimation of your homes value here.

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Technology plays Role in Mortgage Shopping Experience

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Technology has Role to Fill in Mortgage Shopping Experience

iPadA recent study by Fannie Mae found some distinct differences in the ways higher income earners look for a mortgage compared to lower income earners.  Steve Deggendorf, Fannie Mae’s Director of Business Strategy looked at the shopping behaviors of the two groups through the company’s regular National Housing Survey during the second quarter of 2013.

READ THE FULL STORY

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VA Home Loans and Loan Limits

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VA Home Loans

VA Loans in MN and WI
The VA Home Loan is a big thank you for your service

Minneapolis, MN: VA Loans are some of the most amazing home loans in the market. It really is a true benefit for the service you’ve provided to this country.  The major benefits of a VA loan come in two forms:

  • Zero down payment
  • No Mortgage Insurance

Zero down payment is pretty easy to understand.  Saving for a down payment is one of the biggest hurdles stopping many from buying a home.  No mortgage insurance is also huge.  Generally speaking,  mortgage loans where you do not put at least 20% down payment will need mortgage insurance to offset the lenders risk.  It can be expensive.

Take for example a $200,000 home.  On an FHA loan, you would need a minimum down payment of $7,000 (3.5%), and along with paying back the actual loan, property taxes, and home owners insurance, you would also have $213.81 in monthly mortgage insurance.  With VA home loans, that would be zero and zero! How cool is that?

VA Loan Limits

VA does not set a cap on how much you can borrow to finance your home. However, there are limits on the amount of liability VA can assume, which usually affects the amount of money an institution will lend you. The loan limits are the amount a qualified Veteran with full entitlement may be able to borrow without making a downpayment. These loan limits vary by county, since the value of a house depends in part on its location.

MN WI VA LenderThe basic entitlement available to each eligible Veteran is $36,000. Lenders will generally loan up to 4 times a Veteran’s available entitlement without a down payment, provided the Veteran is income and credit qualified and the property appraises for the asking price.

Lenders need a copy of your VA Certificate of Eligibility (COE) to verify your entitlement. Most experienced VA Loan Officers can obtain that for you.

Here in Minnesota and Wisconsin, you can get zero down payment on loans up to $417,000.  You can get bigger loans too, but over $417,000 – and you’ll need a down payment.  Contact your local VA Lender to determine the exact amount of down payment required.

 

HARP refinance – working for thousands in MN

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Few things the government does can be called a real success story, but the HARP Refinance program is one of them.

If you’re not familiar with the Home Affordable Refinance Program, also known as HARP, it’ is a program for good homeowners, that through no fault of their own, lost value on their home and therefore typically could not refinance. 

Generally speaking, it serves two situations.  First is that your current loan was done NOT needing mortgage insurance. Having lost value, now for example you owe 95% of the (lost) value, and could only get a new loan by adding expensive mortgage insuance to the new loan.

The second is that you bought the house, you put at least 5% down payment. So today, if you now owe more than the home is worth, you normally would NOT be able to refinance at all.

HARP, which started back in 2009, fixes both of those situations. If your existing loan does NOT have mortgage insurance, regardless of the current loan-to-value, your new loan would NOT need mortgage insurance. If your house is underwater… regardless of how far underwater, you can also refinance.

BASIC HARP Refinance REQUIREMENTS

Who is eligible for HARP? You may be eligible if:

  1. The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.Who you make payments to can be different than the underlaying owner of the loan.
  2. The mortgage must have closed on or before May 31, 2009.
  3. The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  4. The current loan-to-value (LTV) ratio must be greater than 80%.
  5. The borrower must be current on the mortgage at the time of the refinance, with no late payment in the past six months and no more than one late payment in the past 12 months.

 Do I qualify for a Home Affordable Refinance – HARP?

While there are requirements you have to meet to qualify, many have misconceptions about HARP that are misguided or completely false. Don’t assume you can’t qualify, or that you will be denied. Contact an experienced local mortgage broker for a quick no obligation review.

HARP BENEFITS

  • Lower your monthly payments
  • Closing costs are the same as any other mortgage loan
  • Closing costs can be rolled into the loan
  • Refinance into a shorter loan term (20-yr, 15-yr, etc)

LOAN NOT FANNIE MAE OR FREDDIE MAC

If you have a conventional loan, most likely it is owned by Fannie Mae or Freddie Mac. But if you have a different loan. Maybe an FHA Loan, and VA Loan, or even a USDA rural housing loan – you can still refinance if your home has loat value.  Those loans all have seperate programs, known as a streamline refinance. These programs offer reduced documentation, but the biggest benefit is there may be no appraisal required, allowing lost value or underwater homes to easily be refinance to today’s interest rates.

In MN or WI, visit www.HARP-Refinance-MN.com for more information and assistance on the HARP 2.0 government refinance program.

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FED taper has begun – Now what for mortgage rates?

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So the Fed taper has officially been announced, and will start next month.  Now what for  mortgage rates?

Fed Chairman BernankeThe answer is, it depends.

How fast will the Federal Reserve winds down the rest of its bond-buying program.

Do they stay on track for what was announced? Will the economy continue slowing getting better?  How will the new Fed Chairwomen handle the office?  These, and many other items all play into the question.

On Dec 18th, the Fed announced that it would taper (slow) its mortgage bond buying by $10 billion per month, split evenly between its purchase of Treasury bonds and mortgage-backed securities.  Soon to be out the door Chairman Bernanke said in a press conference that the Fed would most likely continue to slow down the bond purchases at a rate of $10 billion at a time, over the next several meetings of its rule-making committee.  He also said that decision was more of a flexible guideline than a hard-and-fast policy, and that the process will be deliberate and data-dependent. He further added that  if the economy slows, we could skip a meeting or two. On the other hand, if things really pick up we could go faster.

The guaranteed outcome is that mortgage interest rates WILL RISE as the Fed winds back its bond purchases. As for how fast and how far rates rise, that depends on how steady, and how fast or slow the tapering is over the next year.

Myths about HARP 2 refinance explained

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HARP 2 refinance in MN or WIA Freddie Mac senior vice president is using the company’s blog to debunk a few myths she says may be keeping homeowners from refinancing with a HARP 2 refinance (the Home Affordable Refinance Program).

Tracy Mooney’s information about on nine HARP misconceptions might not only be helpful for homeowners themselves but a good resource for lenders to share with customers and the public.

READ THE FULL ARTICLE HERE

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