General – Page 7 – Minnesota Mortgage and Real Estate Daily Blog

Refinancing after a bankrupcy

February 12, 2014February 6, 2014 by Joe Metzler

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.

If 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

February 5, 2014 by Joe Metzler

2013 Home Value Growth Best in 8-years

A 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

January 23, 2014 by Joe Metzler

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

January 21, 2014 by Joe Metzler

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.

5. 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

January 19, 2014 by Joe Metzler

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

Minneapolis, 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

January 18, 2014 by Joe Metzler

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, MN Mortgage 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

January 7, 2014 by Joe Metzler

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.

The 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

January 3, 2014 by Joe Metzler

Technology has Role to Fill in Mortgage Shopping Experience

A 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

January 2, 2014 by Joe Metzler

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.

The 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

December 27, 2013 by Joe Metzler

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:

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.
The mortgage must have closed on or before May 31, 2009.
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.
The current loan-to-value (LTV) ratio must be greater than 80%.
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?

December 19, 2013 by Joe Metzler

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

The 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

December 17, 2013 by Joe Metzler

A 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

Big TV Mortgage Companies – Deal or no deal?

December 15, 2013 by Joe Metzler

You and I are constantly bombarded with some big national mortgage companies advertising. Because they are familiar to you from a TV or radio ad, does this automatically make them the best place to get a mortgage loan? The answer is no. 100% absolutely no…

You need to understand that all lenders underwrite to the same program (Fannie Mae, Freddie Mac, FHA, VA, etc.) , get their money from the same sources, and have to pay the same third party fees (appraisal, credit report, etc).

The real difference from any lender on any given day might be about .125% for the same program when comparing the same closing cost quote.

Mortgage Advertising Bait-n-Switch

Most of their so called “deals” simply employ creative low ball quoting that the average homeowner doesn’t understand. To make it worse, these types of companies typically employ low level, low education application clerks. Is that who you want handling your largest financial transaction? An application clerk?

Another item to understand… if all lenders get their money from the same bond market on the same day at the same time. If all lenders have essentially the same costs to close your loan. How does the company advertising on TV and radio all day, everyday, in all markets across the country pay for that huge expense? Well silly… They charge it to you!

We have a saying in our office. They more they advertise, the faster you should run away.

Your best bet has always been, and continues to be to go visit your local licensed Loan Officer at your LOCAL mortgage broker.

HARP 3.0 refinance coming soon?

December 12, 2013 by Joe Metzler

A new evolution of the HARP refinance program MAY soon be upon us.

HARP 3.0 looks like it’s going to gain headway and make it’s way to the streets since Mel Watt is the new kingpin of FHFA.

HARP loans in MN (Home Affordable Refinance Program) have been one of the few programs to really assist homeowners since the real estate market collapse. The program allows homeowners who has a loan owned by Fannie Mae of Freddie Mac to refinance to today’s lower rates, even if they’ve lost value on the home, or are actually underwater on their loan.

Since the start of HARP back in 2009, those without a Fannie Mae of Freddie Mac loan have been out of luck, but that MAY be changing soon.

Under the current HARP refinance rules:

You may be eligible for a current HARP 2.0 refinance if:

The mortgage must now be owned or guaranteed by Freddie Mac or Fannie Mae.
The mortgage must have closed with your lender on or before May 31, 2009.
Check for ownership with: Fannie Mae or Freddie Mac
The current loan-to-value (LTV) ratio must be greater than 80%.
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.

Stay tuned… We’ll pass the word if and when HARP 3.0 becomes reality.

HUD lowers FHA Loan Limits for 2014

December 9, 2013 by Joe Metzler

New FHA Loan Limits

Looking to get an FHA Loan in 2014 and beyond? HUD ( Department of Housing and Urban Affairs) announced last week it will be lowering the maximum loan amount for FHA loans (Federal Housing Administration). The new limits will take effect Jan. 1.

Each county across the county has a maximum loan amount, which is tied to the areas average income. The standard FHA loan limits for areas with relatively low housing costs will stay at its current level, $271,050. However, the limit for areas with the highest housing costs will be reduced by more than $100,000, from $729,000 to $625,500.

To learn what is available in your area

Use this FHA Loan Amount Lookup Tool. Be sure to click the CY2014 for the new limit

The current limits have been in place for the past six years, and were originally set to lower in 2009, but were left alone because of the real estate crash.

Loan limits for FHA-insured reverse mortgages will remain the same at a maximum amount of $625,500, with actual loan limits based on the value of the property, current interest rates and the borrower’s age.

While not for just first time home buyers, they are wildly popular with first time buyers because they only require a down payment of 3.5%. That down payment can be their own money, a gift from a family member (like Mom and Dad), or from a down payment assistance program.

FHA loans also allow for a little weaker credit profile, and you can even use one to buy a house needing repair, and get the money to fit it up all in one loan. That is known as the FHA 203(k) rehab loan.

FHA loans are not perfect. They also come with some of the most expensive mortgage insurance of all mortgage loans.

MN down payment assistance programs

December 6, 2013December 6, 2013 by Joe Metzler

Down Payment Assistance programs for first time home buyers in Minnesota.

We have several programs in Minnesota with varying levels of down payment assistance. Up to $10,000 is available in assistance for those who qualify. Most people get much less, usually between $3,000 to $5,000. All programs have different qualifications and quidelines. Please visit our special down payment assistance website to get more information from a licensed Minnesota Loan Officer and down payment assistance specialist.

First Time Home buyers can take advantage of down payment assistance and grants available in Minnesota. First time home buyers typically qualify if they have not owned a property in the last 3 years. If you have owned a property in the last 3 years, you can still qualify for some down payment assistance programs.

Here are some down payment assistance examples:

Below market interest rate with up to 5% (or $5000) down payment assistance loan.
Below market interest rate with up to 3% (or $3000) down payment assistance. No payments. Pay back when you sell.
100% financing in qualified rural areas of MN and WI
100% financing for active or military veterans
Up to $10,000 in assistance – part of which may be forgiven after a few years.
Mortgage Credit Certificates – Used to reduce your tax liability up to $2,000 a year

While having your own money is always best when buying a home, if you have some, but need a little assistance, these first time home buyer programs are just the right tool to make your real estate dream come true.