Home construction slowest since Sept.

U.S. home construction fell in June to the slowest pace in nine months, a setback to hopes that housing is regaining momentum and will boost economic growth this year.

Construction fell 9.3 percent last month to a seasonally adjusted annual rate of 893,000 homes, the Commerce Department said Thursday. That was the slowest pace since September and followed a 7.3 percent drop in May, a decline even worse than initially reported.

Applications for building permits, considered a good indicator of future activity, were also down in June, dropping 4.2 percent to a rate of 963,000 after a 5.1 percent decline in May.

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Check current St Paul Minneapolis MN area Mortgage interest rates – NO SSN Required

Top credit report move that will wreck your mortgage approval

Getting a mortgage loan these days is overly complicated, and annoyingly paperwork intensive. This is simply a response to the market collapse that started a few years ago, when it seemed like everyone could get a loan.

If your credit report isn’t perfect, a super common “trick” that credit repair companies and consumers try is to dispute credit accounts.

While disputing incorrect credit accounts is OK, it IS NOT OK right before applying for a mortgage

Disputing a charge, balance, payment history, or any aspect of the credit obligation places the account in the dispute status. This adds  “in dispute” to your actual credit report until the dispute is resolved.

So Why Is This A Problem?

The powers that be who make underwriting guidelines (Fannie Mae, Freddie Mac, FHA, VA, etc) have decided that whenever an account is in dispute, your credit report no longer provides a 100% accurate picture of the persons credit history.  Therefore all the computerized systems used to underwrite the initial aspect of your file ignores accounts in dispute, and your file either becomes automatically rejected, or is switched to what is known as a manual underwrite.

Manual underwriting dramatically changes maximum debt ratios, program guidelines, and the level of documentation needed. Manual underwriting could easily take a file that should be approved, and turn it into a denial.

The solution:

If you are thinking of buying a home and have credit challenges, you need to work on credit repair when you start thinking of buying a home, not once a loan officer says you have issues. Everyone has an idea of where their credit sits. Act early.

Next, don’t dispute anything or everything on your credit report. If an account is negative, but accurate, disputing is a waste of time.  I’ve seen people try disputing their bankruptcy!  Really??

Finally, you can talk to the credit bureau to remove the dispute item comments from your credit report in most cases.  It may take some time, so again, plan ahead. Do it before you’ve fallen in love with your dream house!

Minneapolis, MN: Current mortgage interest rates are hovering just a hair above historic lows.  So why are record number of home buyers not buying?

So do interest rates really matter? Sure, they’re are a very big key component in a person’s decision to buy because of the borrower’s monthly mortgage payment. And often the first conversation between a real-estate agent and a potential buyer —”How much are you willing to spend?”— can be influenced quite a bit by mortgage rates.

Given the initial desire to buy a home isn’t purely rate-driven, home buyers must weigh what’s for sale, their family and job situation, what the payment might be, etc. It could take a while to see what effect, if any, the recent drop in interest rates has on demand for homes… But lower interest rates, as the word spreads, should increase demand for homes.

What does this payment picture look like right now? The monthly payment on the loan itself (not including taxes and insurance) on the median-priced U.S. home fell from $673 in February 2011 to $552 in September 2012 as interest rates fell.

Interest rates stayed low through May 2013, but the average payment rose to $586 as home prices ticked up. (These calculations assume a 20% down payment on the national median home value as calculated by Zillow).

Looking to buy a home with a Zero Down Payment USDA Rural Development Loan?

You don’t need to buy a home in a cornfield to use the USDA Rural Housing loan, but the property does need to meet their rural definition, and many areas qualify.

USDA loans, like most others, require mortgage insurance. Effective October 1, 2014, the monthly mortgage insurance on a USDA loan will increase to .50%.  This is up from the current .40%.

On a sample $100,000 loan amount, the new mortgage insurance costs would be $41.87 a month, up from the current $33.49 a month.

While no one likes the increased costs, USDA loans still have some of the lowest mortgage insurance costs of any home mortgage program, and is still an amazing value.

Learn more about USDA Rural Development Loans in MN, WI, IA, ND, SD

Tips for getting a VA Loan in MN or WI

If you are an active or military veteran, the VA home loan is one of the most amazing benefits provided to you for your service to our country.

The two biggest benefits of a VA mortgage loan are simple…

1. No down payment required
2. No monthly mortgage insurance, which can save you a HUGE amount of money when buying a home.

Basic VA Loan Eligibility Requirements for a VA loan

The first step is to understand if you qualify for VA Loan benefits.  The vast majority of people with regular service in the Army, Navy, Air Force, Marines, or Coast Guard qualify as long you have served  active duty a minimum of 181 days (90 days during the Gulf War). and you haven’t been dishonorably discharged.

Reserves and National Guard have to have completed 6-years of basic service, or at least 90-days of active duty (deployed) service.

There are all sorts of additional rules and guidelines in terms of service less time, and still qualifying. These include hardship early out, and service related disabilities. There are even options for the surviving spouse of a veteran who passed away during active duty to obtain a VA home loan.

Anyone dishonorably discharged from service does not qualify for a VA Loan, and some with less than honorable discharge may also not qualify.

Always check with an experienced VA Loan Officer if you have questions about your eligibility.

Certificate of Eligibility (COE)

All VA are require to obtain a copy of your VA certificate of Eligibility (COE).  The certificate tells the lender if you qualify, if you have a service related disability, and if you’ve used your VA Loan benefits previously.

Most veterans don’t seem to know where their certificate is these days – but that is OK.  Experienced VA Loan officers can usually obtain your COE in just a few minutes through a special VA Lender Portal called ACE.  Sometimes we can’t get it, and will need you to sign VA Form 26-1880, and for you to supply your discharge papers (like a DD214)

VA Home Loan Specialist

While most of the basic guidelines for a VA Home Loan are similar to any other mortgage loan, there are enough other requirements that anyone not specifically trained and experienced in VA loans is someone to avoid.  I hear from people all the time that they started a VA loan application at some other company, only to realize the loan officer has no VA loan experience.

Before you apply for a VA Loan with just anyone, I strongly suggest you contact a local to your area VA Loan Specialist.  Someone right down the street that you can go meet with well documented VA Loan experience.

First Step for a First Time Home Buyer

Minneapolis, MN:  Congratulations, you’ve decided that you would like to own you own home.  As a first time home buyer, what should be your first step to home ownership?

Consult a Local Mortgage Loan Officer

The vast majority of people, in my opinion, start the process wrong, by talking to a real estate agent first. Without fail, the number one step to home ownership is to talk to a local mortgage company Loan officer.  Why?  Simple. How else do you know what you can afford, what mortgage programs are available to you, or how much cash you’ll need to pull it all together otherwise?

When talking to a real estate agent first, you are already off on the wrong foot.  A real estate agent job is to find you the right house… But without knowing what you can afford, how can they show you anything?  Any good real estate agent knowing you are not already pre-approved by a lender is simply going to refer you to a Loan Officer to figure out your financing.  You might as well go there first.

Many people think they will be approved, and have an idea of what they can afford – and most of the time they are correct.  Sadly, a lot of them who think they can be approved, simply can not.  Another misconception is that if you have an OK credit score, that you will be approved.  Credit scores are a great start, but credit scores alone do not make for a loan approval.

What Mortgage Company to Choose?

The mortgage company you choose equals about 20% of the success in getting a home loan,  The Loan Officer you choose equals the other 80% of the success. For the most part, almost all mortgage companies offer the same basic loan programs.  Conventional loans, FHA Loans, VA Loans, USDA Rural Housing Loans, first time home buyer, and down payment assistance programs.  Furthermore, all mortgage companies have essentially the exact same closing costs and interest rates.  So shopping around based on those parameters doesn’t get you too far.

Your Loan Officer on the other hand is essentially the primary figure and nucleus of the entire transaction.  Their knowledge and expertise in loan programs, underwriting guidelines, and communication skills between all parties can not be overstated.  Your Loan officer works with everyone, from you the buyer, to both the selling agent, your buying agent, processors, underwriting, title company, appraiser, and more. Having a new, weak, unlicensed, or inexperienced Loan officer can cause all sorts of problems.

Licensed versus Unlicensed Loan Officer

Most people don’t even realize there is a difference, yet a whopping 80% of Loan Officers are NOT licensed. Clearly if most people knew there was a difference, they would only work with a licensed loan officer. Licensed loan officers need to have successfully completed mortgage education, passed stringent Federal and State testing, completed criminal background checks, and are required to attend continuing education classes each year. Non-licensed, but simply registered loan officers do not need to do any of those items.

Verify a Loan Officer is Licensed

Luckily, there is a national database where you can check to see if the person you are working with is simply registered, or fully licensed.  Go to www.NLMSConsumerAccess.org. Type in the Loan Officers name or registration number (NMLS number).

Once there, look at the bottom of the page.  If is says State Licenses/Registration and lists one or more states, this person IS Licensed.  If it says Federal Registration, then Federal Mortgage Loan Originator, this person is NOT Licensed

Minneapolis, MN:  First Time Home Buyers don’t know what they don’t know… so they end up anxiously asking all of their family, friends, and the Realtor for financial advice.  Because none of these people are Mortgage Loan Officers, they end up just hearing horror stories, and getting incorrect information, adding to their anxiety.

Start Here:

Take a Peak at your Credit Report as early as possible.

Your Credit is more important than having enough cash, or getting the best mortgage rate. Your credit rating, or LACK of credit rating will be the single determining factor for when MANY people can buy a home. Minimum Credit Score Requirements for a Mortgage will vary based upon the mortgage program you are applying for. You will read all sorts of information about credit scores on the internet, but the reality is that is your middle credit score is BELOW 620, you are not ready to buy a home..

Have some down payment money.

You may read and hear about down payment assistance programs and other first time home buyer programs. Most of the time when you read the fine print, those programs are not what you think they are. Secondly, even with a zero down payment programs like VA Loans and USDA Rural Development loans – zero down payment does NOT mean zero out-of-pocket costs.  You CAN get into a house with absolutely no pennies out of pocket – but it’s HARD, REALLY HARD. We strongly suggest that you have at least $1500 of money you can dedicate to buying a home for a zero down program, and strive for at least 5% down to get the best possible loans..

Be financially ready to buy a home

If you have nothing in the bank, and have been bouncing checks, you are not ready to buy.  If you have credit challenges, fix them before applying.  If you have a ton of debt, pay it off.  Living at home paying no rent allows you to spend like crazy, and you can afford that fancy new car.  But that same fancy new car and big credit card payments could easily derail a loan approval for having to high of a debt ratio.

Talk to a Mortgage Professional

Finally, when you think you are ready to buy a home, avoid the chatter from the internet, friends, family, and the Realtor… again not mortgage professionals.  Talk to, and apply with a fully licensed and experienced Mortgage Loan Officer. Let them professionally review your application, credit, and overall situation. They will advise you on what programs may work for you, how much house you can afford, how much money you may need, and will get you fully pre-approved.  Once you are approved, you can talk to a Real Estate agent about the home that fits your budget.

By the way, understand that all Loan Officers are not equal.  Only about 20% have a license. The rest are more of just an application clerk. Don’t work with application clerks. Read this article on how to pick an expert Mortgage Loan Officer.

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.

Historically 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?