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Joe Metzler

Lastest Mortgage Rules changes

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The mortgage industry is constantly changing. Keeping up with the rules, even for a 20+ year experienced Mortgage Loan officer like myself is very difficult.  The following is a quick breakdown of recent changes for both potential home buyer or real Estate Agents to know:

FHA Loans with Collection and Charge Off Accounts on Credit Reports:

This is a big one. This new FHA rule is going to disqualify a lot of potential home buyers.  Your credit report is going to be even more important than ever before.  Under the old rules on FHA loans, old collections and charge off items did not have to be paid off or dealt with as long as your credit score was OK enough to qualify.  With the new guidelines, FHA is now requiring lenders to include estimated monthly payments on collection and charged off accounts based on 5% of the outstanding balance.

Adding a “mythical payment” of 5% of the balance will dramatically raise these buyer’s debt ratios, resulting in either significantly lower purchasing power, or potentially preventing some from purchasing a home at all.

No More 3% Down on Conventional Fannie Mae Loans:

Fannie Mae has been the last holdout for 3% down conventional loans, but they are switching to a minimum of 5% down.  Freddie Mac switched some time ago. Home buyers will now need at least 5% down payment. The 3% down conventional loan had been a very popular alternative to the 3.5% down FHA loan because of cheaper mortgage insurance and less stringent home condition requirements. Note, in MN we still can offer a 3% down conventional loan tied in with the MHFA Start Up down payment Assistance program.

Debt-to-Income rule change:

During the housing boom, lenders could allow debt ratios well into the upper 50% range.  After the housing crash, Fannie Mae and Freddie Mac dropped that to a maximum of 45%.  The Frank-Dodd Financial Reform and the Consumer Financial Protection Bureau laws are dropping that to a maximum of 43% starting in January 2014.

New Three Percent Rule:

Closing costs and Points paid by the borrower will not be allowed to go over 3% of the total amount of the loan. cfpb_logoWhat fees are included in the 3% have not been clarified. This rule may sound great on the surface – the government is protecting homeowners from lenders charging outragious fees – the reality is just the opposite.  This new rule will have a very serious effect on those looking for smaller loan amounts (typically under about $100,000). As a lender, we already have trouble with loans under $50,000, and this rule is just going to make it worse. A great example is an appraisal. Regardless if you buy a $40,000 home or a $400,000 home, the appraisal fee is the same. About $400 in my area (Minneapolis, MN). On the $40,000 home, that appraisal fee alone is a full 1% of the purchase price, while on the $400,000 home, it is only 0.1%.

Qualified Mortgage (QM):

More new rules because of the Frank-Dodd Financial Reforms laws, and the creation of the Consumer Financial Protection Bureau.  Lenders will be given “safe harbor” from homeowner lawsuits if the loan they provide you fits the more restrictive definition of a Qualified Mortgage.  They are still hammering out the final details of what a QM loan will be, but bigger down payments, lower debt ration quidelines, and more “proof” of income are just some of the items that will be in the final QM rule. The end result means more and more people will NOT qualify for a mortgage as lenders tighten guidelines even more to fit the Qualified Mortgage rules.  An article I just read said only 1 in 5 current loans would meet the new definition.

Common home selling mistakes to avoid

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Selling your home?  Here are some common home selling mistakes to avoid

Minneapolis area Home selling mistakes
Selling your Castle? Tips to have a smooth transaction

Minneapolis, MN:  The time has come to sell your home.  Sadly, I still see a lot of people make these very common mistakes.   Hopefully this quick article is full of tips to help you have a happy and successful sale of your home.

Sideline your Emotions:   Sentimental value?? Forget it. A buyer doesn’t care how much you love the house or anything about your memories there.  Be realistic.  Treat the sale of your home like any business transaction.

Setting an unrealistic price.  It’s important that you’re not married to your price.  Most people who are do so because of emotions (see first item).  Regardless of what you feel, the local market sets your price.  You need to be competitive with the same or similar homes in your neighborhood in order to sell your home.

Not hiring a Real Estate Agent.  FSBO, or For Sale By Owner may sound like you are saving money by not paying listing fees.  More often than not, after months of frustration, you will end up with an unsold home, then listing with an agent anyway. Real Estate Agents exist for a reason.  They are licensed and trained. They know how to properly set sale prices, market, and negotiate the deal with all legal requirements met.  Sure, some people can do it, but the other 99% can not.

Skimping on listing photos:  Photos sell homes!  Everyone looking on the internet these days will “see” your house if they are searching for your neighborhood and price point.  What makes them stop at your listing and want to see the house?  PHOTOS!  Make sure your agent takes great pictures, and that they put as many as their local MLS will allow online.  It is also worth hiring a professional photographer, and isn’t very expensive

Trying to sell a dirty or cluttered home:  We know you need to live in the home until it sells, but when viewing your home, buyers want to envision how their furniture would look.  Cluttered houses and a “lived in” look will simply detract the average buyer.  Move out clutter, put it in storage if you have to, and keep the house as shiny and spotless as possible for showings!

Hiding problems:  Don’t try hiding problems with the house.  Most people have an official inspection. It just wastes everyone’s time to start the process, only to have it discovered later.

Not getting pre-approved for your next house:  If you are going to be buying a new home, don’t assume.  Talk to a local licensed mortgage professional BEFORE listing your home.  The rules have changed.  You may assume you’ll be able to get a new mortgage loan, and you may be right.  But knowing for sure, what possible payments will be, how much money you’ll need, and current underwriting rules just reduces one more level of stress.

By keeping these common mistakes in mind and doing your best to avoid them, selling your home should be relatively quick, and free of problems.

 

New FHA rules allow new home purchase just 1-year after foreclosure

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​The Federal Housing Administration (FHA) recently announced a significant mortgage rule change that will allow some borrowers to get a new FHA loan as early as just  one year after short-sale, deed-in-lieu, full foreclosure, or bankruptcy as part of their new “Back to Work – Extenuating Circumstances” program.

Back to Work Eligibility guidelines are pretty strict. 

FHA Back to Work Program in MNPotential borrowers must be able to prove that a major economic event, such as a job loss, or severe reduction in household income (20 percent for at least six months) was the main catalyst in losing their home.

Potential new homeowners will also need to document and prove their income has since fully recovered, and that their credit score are now satisfactory. Finally, potential borrowers will need to complete a one-hour one-on-one housing counseling session.

Borrowers will need to meet all other standard FHA eligibility criteria for an FHA mortgage loan.

To be deemed with “satisfactory credit,” borrowers will need to meet the following guidelines for a minimum of 12 months:

  • No collection accounts or court records reporting (other than medical and/or identity theft).
  • No history of delinquency on rental housing payment.
  • No more than one 30-day late payment due to other creditors.

Prior to the major economic event, the borrower’s credit must have been satisfactory and in good standing.

With that all said… my company, Cambria Mortgage, will be happy to review you for approval under this new program.  The first steps are:

  1. Have borrower document the 20% drop in income.
  2. Have borrower take counseling
  3. Then take full FHA mortgage application

A list of acceptable housing counselors can be obtained by calling 1 (800) 569-4287 or online at www.HUD.gov

 

Mortgage Underwriting Red Flags – Things to avoid

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Getting a mortgage loan?  Does it feel like the underwriting process is over zealous?  It is… but the reasons why are justified.  During the real estate boom from around 1999 to 2007, fraud was rampant.   A big reason for the fraud was that the lending industry was a bit too trusting.  So today, when the industry verifies everything, it feels a bit intrusive.

I simply ask this:  If you were to give a stranger hundreds of thousands of dollars, what would you ask for to be comfortable?Mortgage Fraud

These days every Mortgage Application is examined very carefully for any sign of possible fraudulent activity.  There are several high areas of possible fraud activities that Underwriters look for in all loan applications:

  • Mortgage Application fraud
  • Occupancy fraud (really a rental)
  • Credit Reports
  • Employment Fraud
  • Down payment money fraud
  • Income documentation fraud
  • Appraisal fraud
  • HUD-1 (Settlement Statement shows suspicious items)

Underwrites also look very closely at  the Purchase Agreement.  We deal with numerous issues on the contract that Realtors may just be sloppy, or are trying to hide something. Being aware of what these Red Flags may be can help to avoid underwriting nightmares.

  • Any item that has been whited out.
  • Numbers appear to be squeezed together due to alterations.
  • Different handwriting and signatures for the same individual.
  • Earnest Money Deposit equals the whole Down payment or is an odd amount.
  • Earnest money check not from the actual buyer
  • Non Arms-Length transaction.  For example the Seller is a Real Estate Agent, Broker, Relative, Employer, etc.
  • Seller is not presently listed on Title.
  • Seller has only owned the home for a short period
  • Multiple buyers on contract but only one applying for mortgage
  • Buyer has been added to, or deleted from the Sales Contract
  • Power of Attorney transactions.
  • Personal items on contract (boats, lawn equipment), then “removed”
  • Earnest Money Checks have inconsistent dates.  For example Check #101 is dated 11/12, but Check #103 is dated 10/28.
  • Contract is filled in, in very few areas with several areas left blank which is not typical of a normal Sales Contract.

The above list is not all inclusive, but it gives a good idea of how closely Underwriters Look For Red Flags During The Loan Approval Process.  The more aware Realtors are of what Red Flags Underwriters are looking for in a Sales Contracts, the more questions they can help eliminate, and reduce issues and closing delays.

Buying a new home? Are you really Pre-Approved?

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Seems like every week I get a new client, who has been working with another lender, and suddenly, their mortgage application was denied very close to closing.  A common statement they make is, how can that be, I was Pre-Approved?”

THE APPROVAL PROCESS

The answer is yes and no.  Under the standard procedure most lenders follow is that the loan officer takes an application.  Next the loan officer should pull credit. This should give the lender a good preview of the potential final outcome.  Many lenders will give a pre-approval letter at this point, but they really should not.

IF YOU HAVE NEVER SUBMITTED SUPPORTING DOCUMENTS, YOU ARE NOT PRE-APPROVED

If the application looks good, the lender should now collect and verify your supporting documents.  This includes W2’s, tax returns, pay stubs, bank statements, and other needed documents depending on your situation, like divorce and bankruptcy papers.

Upon a successful review of the application and supporting documents, your Loan Officer should be able to provide a valid Pre-Approval letter.

IS THIS A GUARANTEE?

Your Pre-Approval is not a guarantee.  But at this stage, a properly reviewed application from an experienced Loan Officer is as close as you can get to knowing your application will be approved.  There are many more steps between this stage and closing. Unfortunately, this is where a lot of loan applications run into trouble.  Poorly trained, unlicensed, and inexperienced Loan Officers miss many important items at this stage.  The list of items they miss is too long to list here. Understand that 80% of loan officers are NOT LICENSED.

UNDERWRITING

Your application will now go through a processor.  That person will usually order the appraisal, title work from a title company, an IRS copy of your tax transcripts, and generally scrub the file to make sure the minimum items needed are in the file.  Once everything is back, the full file goes to underwriting for review.  Assuming everything was entered and done correctly up to this point, the vast majority of loans are fully approved and cleared to close.

images124ISSUES DURING UNDERWRITING

Surprises that show up at this stage included incorrectly calculated income, unqualified income,  appraisal issues, inappropriate funds to close, and surprises on your tax transcripts, like small self-employed side jobs, or large un-reimbursed employee expenses. At this point, we even run into people who during the application process have lost their jobs!

CONCLUSION

As you can see, there are a few items that can truly pop up to kill an application that are not discovered until during the underwriting process. BUT THE VAST MAJORITY are not surprises.  Most were there to be discovered at application.

10% of the success of your mortgage application is the company you chose.  90% of the success is the Loan Officer you chose.  Chose wisely!

 

Rising home prices restoring lost equity

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Real estate value - What is my home worth - Appraisal MinneapolisRising home prices restoring lost equity

As home prices continue to rise, millions of home owners are regaining equity, according to date released yesterday.

An estimated 2.5 million homes went back into a positive equity position in the second quarter, meaning they are no longer underwater – that their owners no longer owed more on their mortgage than the home is worth.

According to date from CoreLogic, the likelihood that a home was underwater dropped to a level where only an estimate 14.5% of all mortgages had negative equity.  This is compared to 19.7% in the first quarter of 2013.

What does this mean for the Real Estate Market?

First, people simply feel better about their overall position in life.  Many consumers have the bulk of their wealth tied to the real estate.

Many people the past 5-years have wanted to sell their house, but have been unable due to being underwater. As equity positions improve, these people can now safely put their home on the market without fear of having to write a check to sell their home.

It also allows more people to refinance to today’s lower rates.  Programs like HARP (the Home Affordable Refinance Program), FHA Streamline Refinance, and a VA IRRRL Streamline Refinance, have allowed many people to refinance today without an appraisal, and without having to worry about being underwater. Yet about 20% of all loans are NOT a Fannie Mae, Freddie Mac, FHA, or VA loan. If you are one of the 20%, you have not been able to refinance if your home was underwater.  Improving equity allows these people to refinance, freeing up money to be spent elsewhere.

 

Tips for negotiating when buying real estate

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Buying real estate,  especially those for first time home buyers can result in a wide variety of emotions. Fear, excitement, and a sense of being overwhelmed are many that I hear from my mortgage clients.

Real Estate Negotiations in Minneapolis, MNAll real estate is local, so while in some areas, the buyers are in control, in others, the seller is in control. Regardless of the situation, negotiations skills are important.  Most of the time, the actual buyer is not in direct control of the negotiations, your Real Estate Agent is.  So be sure to pick a good one, and to use the following negotiation tools to get the home you want, at the price you want:

Keep your emotions at bay – One can get excited over the perfect property.  Being transparent, or having a poker face with your emotion may lead to getting a better deal.   If  you have already become too attached to the property, you might end up compromising the deal and giving in to the sellers demands.   Be as objective as possible and take control of your emotions.

Study the local real estate market – Whether you are buying through a real estate agent or you are on your own, you must have a good knowledge of how much is the worth of the properties around, especially the one which you are most interested in.  Studying the market will give you a good picture if the property you like  is underpriced, overpriced or just priced just right.   Do not just go into the field of negotiation without having the right knowledge of what you are getting yourself into. Knowledge and sound assessment is the key.

Discover the selling motivation – Sellers sell for many reasons.  Knowing why will help greatly in your negotiations.  Have they been in the house for 20-years, and own nothing?  Do they owe exactly what is is worth?  Have the kids received the house because of a parents death and just want to dump it?  Try to find out the selling motivation and use it to your benefit.

Don’t be afraid to make a low offer.  Housing is the most expensive item the average person ever buys.  We’ve all heard that making a low-ball offer will offend the seller.  Yes, you might.  Big deal.  95% of them will still negotiate on price.  So don’t be afraid to start realistically low, and near the appropriate value of the home.  You can always counter-offer higher.

Be prepared to walk away.  Walking away is the most powerful tool you have. It may not feel like it at the time, but I promise if the numbers don’t work on this house, you’ll soon find another that you just just as much were the numbers to work.

Homebuilders sucker clients with phony financing incentives

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I just about threw up in my mouth after reading this article on Bloomberg news on “Homebuilders Using Financing Incentives To Defy Price Cuts”

New construction financingThe article reads like free advertising for builders, but seriously lacks the true story. The article examines the “incentives” that builders are offering to home buyers who use their preferred mortgage company, and implies scare tactics that only the builders mortgage company will close the deal on time, saying “Few things are more frustrating to the homebuyer than having to push back a closing by a few days or weeks because the outside lender wasn’t ready with the mortgage.” I cry foul…

Builders are reporting record profits – No builder is giving away anything! They simply price it into the overall cost of the home, then offer teasers to lure unsuspecting home buyers into their trap.  Increase the margins on the home price by $20,000 – then give a buyer a $10,000 credit for closing costs by forcing a client to pay more with “their” lenders isn’t a deal.

Most buyers would be better off telling the builder you’ll get your own financing and to cut the homes actual price to a no incentive price. Sadly, most new home buyers are blind from the glare of their shiny new object (the home) and end up smiling over the “deal” they received. Needless to say, the builder is left with a tidy profit.

REMEMBER: “There’s a sucker born every minute” –  P. T. Barnum (1810–1891), an American showman.

NEW FHA collection, charge-off, and judgement rules to make loans harder

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updateIn a recent announcement (FHA Mortgagee Letter 2013-25) ,  HUD said that while they will continue with their basic rule that most  unpaid collection accounts DO NOT need to be paid off in order to obtain an FHA loan,  they now WILL require that lenders consider how a creditor’s efforts to collect the account can impact the borrower’s ability to repay the loan.

When ANY ONE, OR COMBINATION of unpaid collection accounts equal $2,000 or more, the lender now needs to factor in monthly payments of 5 percent (5%) of the outstanding balance for the account into the debt-to-income ratio. If payment arrangements were made with the creditor, then that payment must be used. This is going to be a major deal breaker for many applicants.

Collection accounts for non-purchasing spouses need to also be considered in community property states (like Wisconsin).  Nothing needs to be done if the aggregate balance is under $2,000.

This additional debt-to-income requirement is sure to hurt many applicants.

Any medical accounts many be  excluded from the requirement.

Impacted loans are those that have case numbers assigned on or after Oct. 15, 2013.

On disputed accounts, manual underwriting is required when the  total is at least $1,000.  Lenders must analyze whether collection accounts or judgments were a result of disregard for financial obligations, an inability to manage debt or extenuating circumstances.

In any event, the borrower needs to write an explanation and provide supporting documentation for each account.

All of this is just more reason to make sure you are working with an experience LICENSED Loan Officer, not an unlicensed bank application clerk.

Mortgage Loan Approval – Things NOT to do

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Applying for a home loan can be a stressful time, but doesn’t need to be if you follow certain rules that can unexpectedly trip up your mortgage loan approval.

Some of these tips will be obvious, while others won’t – but all of them are items that regularly cause underwriting headaches. Avoiding these mistakes will help lead to a smooth stress free home loan closing.

images124Dos and Donts of a Smooth Home Loan Approval

  • DO continue to live at your current home.
  • DO continue to make your home loan payments or rent payments on time
  • DO continue to use your credit as normal (but see don’t items)
  • DO keep working at your current job.
  • DO keep your same insurance company.
  • DO stay current on all your existing accounts.
  • DO keep credit card balances low (below 25% of available credit is perfect)
  • DO call your home loan expert if you have any questions.

DON’T  do any of these items within 90-days of application or until after closing

  • DON’T apply for ANY new credit. No cars, no furniture, no credit cards, no cell phones, no boats, no new loans of any kind
  • DON’T buy any furniture ON CREDIT after you’ve found your dream home
  • DON’T close any credit card accounts,  or consolidate your debt onto one or two credit cards.
  • DON’T pay off any loans or credit cards without discussing it with your Loan Officer.
  • DON’T change bank accounts
  • DON’T move money around from one account to another.
  • DON’T pay off collection and charge offs accounts without a discussion with your home loan expert.
  • DON’T amend your tax returns
For a Refinance
  • DON’T start any home improvement projects, or don’t bother applying until any current project is finished

The biggest item left is simply this… ALWAYS tell your Loan Officer EVERYTHING. Not thinking it is important, or even straight up lying, is only going to cause trouble down the line.  You’d be surprised at the checks underwriting does during the process, and the things that are “discovered”. Mention everything it to your licensed Loan Officer right away so they can help you determine the best way to achieve your home loan goals, and avoid any unnecessary delays or surprises during the process.

 

FHA new Foreclosure forgiveness policy – Not what you think. Read why

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FHA foreclosure guidelinesHow long after foreclosure for a new FHA loan?

Recently FHA announced in mortgage letter 2013-26 the ability to FOREGO the current three year waiting period for previous Foreclosures and Short Sales before you can qualify for an FHA Loan if the borrower had an ECONOMIC EVENT that created a hardship.

It has been brought to my attention that many real estate agents are now advertising this, WITHOUT GIVING THE FULL STORY.

Borrowers MUST MEET VERY STRINGENT guidelines in order to qualify for this EXTENUATING CIRCUMSTANCE.

Here is the link to the actual Mortgagee letter for your reference.  Please read the FHA foreclosure guidelines so you understand what is required.

But there is more…  Just because FHA indicates they may insure a loan meeting these guidelines, you need to understand that FHA DOES NOT DO LOANS.  Lenders do loans, and you will still need to find a lender willing to offer loans under these new guidelines.

My experience tells me that very few lenders will jump on board to offer this product, so be sure to cross your T’s and dot your I’s before you get too excited about suddenly being about to get an FHA Home Loan with a recent foreclosure or short-sale.

FHA Loans versus Conventional Mortgage Loans

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Many folks are confused when it comes to loan options. What type of loan, FHA Loan, VA Loan, or maybe a Conforming Conventional loan? What about fixed rates versus  adjustable loans?

worth_balanceHere are some important differences between FHA Loans and Conforming Conventional Loans (Meaning Fannie Mae or Freddie Mac)

Consider FHA:

1. FHA charges a 1.75% upfront fee known as MIP (Mortgage Insurance Premium) (which is added to your loan balance)
2. FHA charges Monthly Mortgage Insurance of 1.35% annual (divided by 12 monthly payments) on a 30-yr loan with less than 10% down. To calculate it, take your loan amount times 1.35%, then divide by 12. This number is what is added to your loan payment
3. FHA Mortgage insurance can never be removed from the loan if you put down less than 10%.  This is change from the old rules as of 2013
4. FHA technically allows a credit score down to 580 with just 3.5% down, but most lender will require at least a 620 or higher score
5. With FHA, there is no real difference in the interest rate from borrowers with a low 640 score to borrowers with a 800 score.
6. While rates can change, currently FHA rates are usually a little lower than conforming mortgage rates.

Consider Conforming Conventional:

1. No upfront Mortgage Insurance Premium  charge
2. Monthly PMI is lower than FHA PMI.  The cost does vary by credit score and down payment. The more down payment, the cheaper the PMI.
3. PMI can be avoided when the borrower puts 20% or more as down payment
4. Conventional PMI can be asked to be removed at 80% loan-to-value. This can be a combination of paying down the loan, or increased value. PMI will automatically go away once your reach 78% loan-to-value though payments alone. You must have made at least 24 mortgage payments before this can happen.
6. Most conventional lenders require a 660 minimum credit score., and a few will go to as low as a 620 score
7. Conforming conventional loan interest rates vary greatly by credit score in 20 point increments. Someone with a 660 credit score could be paying as much as 1/2% higher interest rate than someone with a 760 credit score.

Although this quick summary shows some of the key differences between FHA and Conventional financing, there could be other considerations which will make one loan product more beneficial to you than the other..

It can be overwhelming.  That is why is is so important to deal with an experienced, and licensed mortgage professional – not just the unlicensed application taker at the bank or credit union.  Sadly, around 80% of  “Loan Officers” are mere application takers, with little to no qualifications to consult or properly advise a potential first time home buyer.  Be sure to only work with an actual licensed loan officer.

LEARN HOW to determine if your Loan Officer is Licensed, or simply an application clerk.

 

No down payment VA home loans

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Take Advantage of your VA Benefits! VA Home Loans for Minnesota and Wisconsin military veterans

VA loans MNWhy get a VA Loan?    

It’s simple … Lower Rates. Lower Payments. $0 Down Payment.

Thousands of people are using their VA Loan benefit every single month. Let us help you purchase a MN or WI home with ZERO DOWN, or lower your existing VA home loan with a refinance to today’s low interest rates.

BUYING A HOME WITH A VA HOME LOANS

Purchase with Zero Down

A VA Loan s

till allows a Vet buy a home with Zero DOWN and finance 100% of the home’s purchase price. Now more than ever, banks are requiring larger down payments for conventional loans with more expensive mortgage insurance. In many cases they require 10-20% down, putting home ownership out of reach for many prospective buyers.

How much will $0 down save you? FHA loans require 3.5% down. Conventional loans will require a minimum of 5% down, and in many cases as much as 10% and 20%.

 VA Loans Minnesota

 

VA loans have NO PMI = Lower Monthly Payments

ZERO DOWN VA Home LoansA VA Loan offers a HUGE savings benefit. They do NOT require monthly PMI, or private mortgage insurance. PMI is an added monthly expense required for conventional loans and FHA loans where the borrower finances more than 80% of the home’s value.

Interest rates are also typically lower with a VA Loan, than a conventional loan. A lower rate combined with monthly PMI savings can substantially lower your monthly payment.

Getting Qualified is Easier

The qualification guidelines are less stringent for VA Loans. Because the loan is backed by the government, lenders don’t need to meet strict lending rules.

VA Purchase loans for Veterans – APPLY

VA Loans require no down payment, and have no mortgage insurance, plus you can roll all your closing costs into the loan. This makes for one heck of a great first-time home buyer deal for military veterans wanting to buy a home! The country appreciates your service. This is one way we pay you back. Today mortgage rates on VA loans are very low, making homes even more affordable.

VA Home Mortgage Loan Advantages vs Other Mortgage Loan Options

  • VA home loans do not require a down payment, unless the purchase price is more than the appraised value or in excess of current loan limits.

  • VA home loans have limitations on which closing costs may be assessed to the veteran.

  • VA home loans have no prepaid without penalty.

  •  Maximum (zero down) VA loan has increased to match conforming loans!

  • VA home loans may have forbearance extended to worthy VA homeowners experiencing temporary financial difficulty

  • VA performs personal loan servicing and offers financial counseling to help veterans avoid losing their homes during temporary financial difficulties

  • VA interest rates are competitive with conventional loan interest rates.

  • VA home loans do not require mortgage insurance – this is a HUGE savings.

  • Although there is no down payment required – There are still closing costs, but the seller usually pays ALL of the veteran’s closing costs (and with a $0 down payment, the veteran can literally purchase a home for nothing).

Brokers accused again of being bad players

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keysThe SEC has accused mortgage brokers of originating the majority of the bad loans that went into an $855m mortgage-backed security deal that has landed a lawsuit at Bank of America’s door.

Hmmm…  Interesting view from the SEC,  because mortgage brokers DON’T:

  • Come up with loan programs or guidelines
  • Underwrite loans, or Quality Control loans
  • Fund or Close loans

Mortgage brokers take applications, collect documentation, go over loan options, select the appropriate lender, then send everything to the actual lender for underwriting and approval.  Mortgage brokers do not make any underwriting decisions.

While brokers have become the scapegoat for many of the problems, the reality is that loose loan guidelines, very poor underwriting, and a desire to push everything through the system was the real culprit.

Click here to READ THE FULL STORY

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Refinancing activity down 55% – Rates still awesome

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Mortgages Rates in Minneapolis, MNAccording to recent surveys from the Mortgage Bankers Association, refinance applications are down 55% from recent highs. The latest survey shows the smallest amount of refinance activity in years, yet refinances still account for 63 percent of all mortgage applications.

Clearly the uptick in interest rates from the lows we say back in May 2013 are having an effect on activity. As mortgage rates move higher, refinancing makes less sense for more and more people.  Current best execution on 30-year fixed mortgage rates is running +/- 4.50%, which is about 1% higher than the recent lows.

From a historical perspective, interest rates are still fantastic, and surveys show there are still millions of people who could benefit be refinancing to today’s current interest rates.

HARP Refinance MNThere is also a huge mental aspect to refinancing. When people “hear” rates have gone up, many don’t even both to check with their local mortgage professional to run numbers.   But interest rates are only one aspect of refinancing.  Getting a short term, like a 15-year mortgage, can easily save many people well in excess of $100,000 or more.  That is nothing to ignore.   For others, refinancing back to a new 30-year fixed mortgage could save them hundreds of dollars a month.

Finally, many people still are under the belief that that can not refinance because of underwriting rules, or because their home has lost value.  But programs like HARP 2, the Home Affordable refinance Program for underwater home are working well for millions of people.

My advice is to never assume.  Call your local licensed mortgage professional for a quick review.  You may be surprised at what you hear!