2022 Housing Market Forecast

July 5, 2022February 1, 2022 by Joe Metzler

I think we can all agree we are ready for some familiarity and to put these unprecedented times behind us.

However, while we hate to say it, we must; there was nothing predictable about 2021, including the housing market. Interest rates hit record lows and we saw the strongest yearly growth in single-family home prices ever. Foreclosure rates were at historic lows and home sales hit their highest level in 15 years. Continuously, homeowners were able to sell their homes quickly and usually well above asking price. Potential buyers grew fatigued attempting to secure the winning bid after losing out on numerous homes. In short, 2021 brought one of the most competitive housing markets in recent U.S. history.

In regards to 2022… Again, there’s a lot we don’t know and frankly cannot predict. There are still many factors at play, like the pandemic and general economic uncertainty, that will continue to drive the unpredictable housing market. With that in mind, in the following paragraphs, we’ve done our best to lay out where we expect the housing market to go next year. Please remember, we cannot guarantee what will happen with the 2022 housing market. The following predictions are just that, a prediction… An educated guess of what we may expect for the housing market in the coming year. With all that in mind, read on and enjoy!

Home Prices
OUR PREDICTION: Home prices will continue to rise but at a slower pace.
The rate in which home prices were accelerating in 2020 and 2021 simply cannot be compared to any other year. This past year, we saw home appreciation levels at the highest they’ve ever been. Next year we’re predicting more homes to come on the market, which should help to forego such intense multiple offer situations and should take the pressure off of high home prices. Home appreciation is expected to increase, just not so dramatically next year. In fact, as we round out 2021, home prices are already decelerating toward a healthier housing market for 2022. Looking forward, buyers should remain prepared for a competitive market but can expect to have more breathing room.

Inventory & Demand
OUR PREDICTION: Inventory of homes will slowly rise while demand remains high.
In 2022, we predict the market will remain strong, but the pace at which homes are selling will decrease; this in turn should bring an increase in the number of homes available to buyers. Over the past year, it felt like there was no inventory. When in reality, there was inventory, just a lack of ongoing supply. When a home hit the market, it was snatched up in record time. In 2022, we expect that trend to dwindle with less bidding wars and more time for buyers to make decisions. In addition, with the flexibility of the option to work remotely for many, we believe home buyers will have wider options as to where they can feasibly live. Without needing to live within a certain distance from the office, buyers will have an expanded area to shop in, making inventory feel more abundant.

Interest Rates
OUR PREDICTION: Interest rates will rise, while still remaining historically low.
If we were to choose just one phrase to sum up the 2021 housing market, we would choose “historically low interest rates”. This next year should be no different. While rates are expected to rise, they should still remain historically low. Inflation is climbing, and the main way the FED fights inflation is by raising interest rates; it feels inevitable that with rates so low, they must go up at least a litte. The impact of rising rates will mean rate term refinances will dwindle, and cash out refinances will take their place. Buyers should still feel the urgency to lock in a low rate, as the impact of rock bottom rates are long-lasting.

Bottom Line
Overall, we predict that the housing market will slow down slightly, but really only in comparison to the fast-paced market 2020 and 2021 brought us. The combination of historically low interest rates, a low rate of unemployment and a strengthening job market will continue to cultivate a solid housing market with homeownership becoming more and more accessible to a wider number of people. If the past few years have taught us anything, it is that things can always change and to expect the unexpected. What will come in 2022 is a mystery, but whatever it may be, Cambria Mortgage is here to guide you through it.

(651) 552-3681 / JoeMetzler.com. NMLS 274132. Serving MN, WI, IA, ND, and SD.

SOURCES:

Brock, M. (2021, December 16). Guide To 2022 Housing Market Predictions And Forecasts. Retrieved December 28, 2021, from
https://www.rocketmortgage.com/learn/2022-housing-market-predictions

KCM Crew (2021, December 29). Expert Insights on the 2022 Housing Market. Retrieved December 28, 2021, from
https://www.keepingcurrentmatters.com/2021/12/29/expert-insights-on-the-2022-housing-market/?utm_campaign=Blog_Promo&utm_medium=email&utm_source=email-automated&utm_content=DailyBlogSubscription&utm_term=BlogPost

LePard, C. (2021, December 09). Real Estate Experts Expect Slightly Better Inventory, Double Digit Home Appreciation In 2022 Housing Market. Retrieved December 28, 2021, from
https://www.news5cleveland.com/marketplace/real-estate/real-estate-experts-expect-slightly-better-inventory-double-digit-home-appreciation-in-2022-housing-market

Meyer, D. (2021, December 10). 2021 Housing Market Recap (& What To Watch for in 2022). Retrieved December 27, 2021, from
https://youtu.be/fW-Ry9b4lYM

Richardson, B. (2021, December 13). Experts Predict What The Housing Market Will Look Like In 2022. Retrieved December 28, 2021, from
https://www.forbes.com/sites/brendarichardson/2021/12/13/experts-predict-what-the-housing-market-will-look-like-in-2022/?sh=37af5f023942

Schuffet, H. (2021, December 16). 2022 Housing Market Predictions: What To Expect. Retrieved December 28, 2021, from

Can you have more than one VA loan at a time

December 21, 2022February 17, 2020 by Joe Metzler

Can I have more than one VA loan at a time?

The quick answer is, you sure can.

Minneapolis, MN: VA loans can be confusing. Veterans frequently ask if they can have more than one VA mortgage loan at a time. The quick answer is yes, while the longer answers is this question usually breaks down into three categories:

I’ve have used a VA loan in the past, can I a VA Loan again?
I currently have a home with a VA loan, and want to sell this home, and buy another house with a VA loan.
I have a home with a VA loan now, I DO NOT plan on selling it, and want to buy another home with a VA loan

The first two questions are easy. Yes, you can use a VA loan multiple times.

The third question becomes a bit more complicated, as it is all about the entitlement you’ve used up on your current home, and how much entitlement is still available to use on the next home.

From there, you might have enough remaining entitlement to buy another home with no down payment, or there might not be enough entitlement left, requiring you to come up with some down payment.

Finally, if the new home you are buying is more than your remaining entitlement allows, you can still use a VA loan, you just need to put down 25% of the difference of the purchase price and maximum loan amount.

The first thing you need to do is obtain your current Certificate of Eligibility to help the Lender your determine your options. When obtaining your VA Loan from a VA lenders like Cambria Mortgage, they can usually get your certificate on your behalf without you needing to do anything.

From there, your Loan Officer can calculate all your options and let you know if you can have two or more VA Loans at the same time.

Need a VA loan in MN, WI, IA, SD, or ND? Click the link below to get started.

VA Lender in Minnesota Wisconsin Iowa South Dakota North Dakota

What does it take to qualify for a home loan?

December 29, 2017 by Joe Metzler

The days of the easy money, and just about everyone getting a home loan are long gone. Today, mortgage lenders are required to prove and document your ability to safely afford the house payment, and show that you are responsible with OK or better credit.

So you’ll usually need these things in order to get a home mortgage loan:

Enough money for the Down Payment (3% is realistically your minimum)
Two years of good steady employment
OK or better credit score (640 or higher is your target)
Monthly income that’s about 3 times higher than your expected monthly mortgage payment
Keep your debt low (especially credit card balances)
Any major negative item be OLD (bankruptcies, foreclosure)

Apply Online — No Obligation to apply, and see what YOU qualify for.

Don’t meet that basic criteria today? Consider these additional options.

Down payment assistance is potentially available (You still need a few thousand dollars MINIMUM).
No Down payment is possible if you are US Military (VA Loan) or want to buy a home in a rural area (You still need a few thousand dollars MINIMUM)
Apply anyway. Don’t assume you can’t get a mortgage. There may be a loans option. Even if it is a not today, they can let you know where your deficiencies are so you can work towards qualifying in the future.
Use a Mortgage Broker. A mortgage broker represents lots of different lenders, not just the offerings of one bank. They simply have more options than banks and credit unions.
Get a co-signor. See if a family member or very close friend with a higher income and better credit than yours will cosign a loan for you.
Lack of Down Payment. Many program allow you to get a gift for down payment from your family. You can also borrow money for down payment from your 401k
No proof of income? True no proof of income loans don’t exist anymore, but you can possibly get a non-conforming loan by using your bank statement deposits as qualifying income. These loans come with higher interest rates, so you should always try for a traditional loan first.

Plan for the future.

Even if you can’t buy a home right now, one fact I know, is if you do nothing, nothing will change. If you understand the guidelines and work at it, there is no reason why anyone can not be a home owner in the not too distant future.

Buy a MN Home with $1,000 Down and Down Payment Assistance

December 21, 2022December 21, 2017 by Joe Metzler

Buy a MN home with as little as $1,000 down? Yes, it is possible.

Minneapolis, MN: One of the biggest true hurdles to home ownership is a lack of down payment money. Sadly, many people don’t even apply for a home loan, because they think you need a much bigger down payment than you actually may.

You may qualify for down payment assistance. Apply to find out.

But, if you have at least $1,000 of your own money, are buying in Minnesota, have OK or better credit (640 score or higher), you may be able to buy your own home using our first time home buyer programs with down payment assistance.

Other low down payment options include:

3% down payment conventional loans (HomeReady and Home Possible)
3.50% down payment FHA loans
No down payment VA loans
No down payment USDA Rural development loans.

If you are in MN, WI, IA, ND, SD – Simply complete the secure online application at www.FirstTimeHomeBuyer-MN.com in about 10 minutes time. A fully licensed and experienced Loan Officer will review your loan application, then go over the various program to see what programs you qualify for, how much house you can buy, what the payments might look like, and finally, how much cash you may, or may not need to put it all together.

If you are in other states, simply find a LOCAL mortgage broker, and apply with them.

You have nothing to lose in applying, and everything to gain in owning your own home!

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Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Cambria Mortgage. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016.

To finance with a home with Joe and Cambria Mortgage, your local preferred lender for Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, simply call (651) 552-3681 or APPLY ONLINE. NMLS 274132. Equal Housing Lender. Not everyone will qualify. See web site for more details. Not an offer to enter into an interest rate lock agreement.

Better credit score tips

October 6, 2017October 6, 2017 by Joe Metzler

CREDIT SCORE TIPS

Are you making this credit score mistake?

Many people believe that running up credit card balances, then making on time payments or paying it in full each month will build higher credit scores. This is a MYTH!

You don’t need to carry a balance or use your card in order to build credit.

This pervasive myth usually gets said around a dinner table or past among friends, and of course is all over the internet – but is a terrible piece of advice — especially if you have bad credit to begin with.

Credit score factors

Carrying a balance says you have credit, need the credit, and are unable to pay off the balance. This is considered poor utilization of credit, and results in bad credit and lower credit scores.

Carrying very little balance, or better yet, no balance, says you have credit available, hardly ever use it, and can pay if off quickly – Which are all GOOD traits and result in good credit and better scores.

You should never carry a balance if at all possible, pay down as much as possible each month if you must carry a balance – and never ever have a late payment under any circumstances to have rock’in credit scores.

When the time comes to buy a home, you want the highest credit scores possible to get access to the most programs and the best interest rates.

Contact our Mortgage Experts at (651) 552-3681 of apply online at www.MortgagesUnlimited.biz

Relaxed student loan guidelines makes qualifying easier

December 1, 2017October 5, 2017 by Joe Metzler

Student Loans and Mortgage Approval. What are the guidelines?

Minneapolis, MN: Student loan debt is at an all time high, and has been noted as a contributing factor to why may people have been unable to purchase a home, especially first time home buyers.

Recent changes to Fannie Mae and Freddie Mac guidelines have made it easier for some, but not all with student loan debt to still qualify for home mortgage loans.

Fannie Mae and Freddie Mac do not do home loans. Rather they buy loans from lenders after that fact. Both Fannie and Freddie have set underwriting guidelines that if lenders follow, makes the selling of loans to Fannie Mae and Freddie Mac much easier. While the number moves, at any given time, Fannie Mae and Freddie Mac control +/- about 60% of all home loans.

Student Loans. How do lenders calculate?

Student loans can be in active repayment, some sort of reduced repayment (which is typically an income based repayment), or completely deferred. While a student loan may be deferred for the next year or two, your mortgage loan is typically a 30-year loan. It only makes sense that lenders take current or future student loan payments into consideration when calculating debt ratios and affordability.

To avoid confusion, I’ll just talk about current guidelines for how lenders currently deal with your student loan debt for debt-to-income ratio purposes.

These guidelines are current as of this article (Dec 1, 2017 (updated)).

FHA Loans:

FHA loans must use the greater of 1% of the outstanding balance, or the payment listed on the credit report, unless you can document the payment is a fully amortizing payment. No income based repayment, graduated payments, or interest only payments allowed.

Fannie Mae Loans:

For deferred loans, must use 1% of the outstanding balance. For loans currently in repayment, use the payment listed on the credit report. If payment is listed as $0.00, but $0.00 is an active income based repayment, we must verify with the student loan company that $0.00 is the income based repayment.

Freddie Mac Loans:

For loans in repayment, use the amount listed on the credit report, or at least .50% (1/2%) of the outstanding balance, whichever is greater.

For deferred loans, must use the amount listed on the credit report, or 1% of the outstanding balance as reported on the credit report.

USDA Rural Housing Loans:

For USDA loans, if the loan is deferred, income based payment, graduated payment, or interest only payment, must use the greater of 1% of the outstanding balance, or the amount listed on the credit report.

VA Home Loans:

For VA loans, if payment is deferred at least 12 months past the loan closing date, no payment need be listed.

If payment will begin within 12 months of closing, use the payment calculated based on:

a) 5% of the outstanding balance divided by 12

b) The payment listed on the credit report if the payment is higher than calculated under (a).

If payment on credit report is less than (a), a letter, dated within the last 60-days directly from the student loan company that reflects the actual loan terms and payment information is required to use the smaller payment.

More people with student loans now qualify

These updated guidelines primarily help those currently in repayment, but with income based, graduated payment, and interest only payment student loans obtain conventional loans.

Regardless of your student loan status, I always suggest that people never assume you can’t buy a home. Always talk with a professional licensed Mortgage Loan Officer to get the facts regarding any financing options. I offer all this loan option and more for properties in Minnesota, Wisconsin, Iowa, North Dakota, South Dakota and can be reached at (651) 552-3681, or www.MortgagesUnlimited.biz

How to deal with collections on your credit report

August 3, 2017 by Joe Metzler

Minneapolis, MN: No one likes having dings on their credit report, but let’s face it, sometimes it is impossible to avoid. When credit dings happen, it is important to work on getting back into the credit good graces, as it effect so many things in your life, from ability to get a mortgage loan, the interest rate you pay on mortgage, credit cards, car loans, and even you paying more for your car insurance. Collection accounts

Next to basic late payments, small collection accounts are some of the most common negative item we see on credit reports. We see a lot for medical items, and old utility bills. We see a lot over disputes with a company that never got resolved.

While some of theses collection accounts may be small, and even long forgotten, they can be real credit score killers.

The main things you need to know about collection accounts

First, is that simply paying them off doesn’t mean they go away. It still happened, and it is still on your credit report. You can always try to leverage paying the creditor contingent on having the creditor completely remove the item from your report, and sometimes this works. I suggest everyone at least try it. But there is nothing mandating a company remove the negative item once paid.

Paying them off also doesn’t magically improve your credit score like people think. You should usually see at least a small improvement to your credit score, especially if the account being paid is a more recent collection account.

If the collection sits on your credit report for a really long time, and you now pay it off, you may temporarily LOWER your credit score because you may have turned the DLA, or Date of Last Activity to a current date. The basic premise being that the older a negative item is, the less it hurts your score. By paying it off, the account for example went from 5-year old unpaid account (which still hurts), to a one month old paid collection, which may hurt more because it is now recent activity.

Most credit repair experts will tell you to pay off collections starting at the newest account, and working back to the oldest, and that sometimes, it is best to just leave an old account alone.

Over time, it is ALWAYS better to pay a collection account. An unpaid collection account hurts credit more and longer than a paid collection account.

Credit score factors

Finally, while some unpaid bill becoming collection may be inevitable, most collections are avoidable. Dealing with the situation up-front is best so it never becomes a collection account. I understand the frustration of a medical bill that should have been paid by insurance, and fighting with the hospital or clinic. But ignoring it doesn’t make it go away, and it will probably come back to haunt you years later.

What are mortgage loan closing costs, and why do I pay them?

July 19, 2017 by Joe Metzler

Home buyers, especially first time home buyers, commonly fail to understand all the costs involved in buying a home. Everyone understands down payment, so no issues there. But mortgage loan closing costs are a whole different story.

I often hear potential home buyer comment that they thought they had saved enough for a down payment, only to be blind sided with mortgage loan closing costs.

WHAT ARE MORTGAGE CLOSING COSTS?

All mortgage loans have closing costs. They include appraisal, credit report, state taxes, title company fees, loan origination fees, state deed taxes, and more. You also have what is known as pre-paid items, which include pro-rated property taxes on the house you are buying, and paying for the first years home owners insurance up-front.

Actual closing costs and pre-paid items can easily range from about 2% to 8% of the sale price of a home, depending on where you live, and the purchase price of the home.

Your Loan Officer will provide you with a detailed estimate of these closing costs based on the actual home once you pick it out, and can give you a good ballpark number during your initial loan review.

TIP: Anyone telling you closing costs are always a certain percentage is flat out simply wrong.

HOW TO PAY CLOSING COSTS

Yes, closing costs can really add up. If you were planning on a 10% down payment, this means you really need 12% to 18% of the purchase price of the home. Yikes.

The good news is, the mortgage industry understands this, and allows you to pay closing costs multiple ways.

Option 1) Pay cash out of pocket. Always the best move, but incredibly burdensome for most home buyer.

Option 2) Seller paid closing costs. You simply ask the seller to pay your closing costs for you when making your offer. Depending on the loan program you are using, the seller can pay between 2% and 6% of the purchase price in closing costs on your behalf. While this sounds free, because the ‘seller’ is paying them for you, the reality is the seller isn’t paying anything. Rather, this is a method of you rolling the closing costs into the loan itself.

For example, the seller is asking $200,000 for the home. You offer $200,000 – but also ask the seller to pay $6,000 of your closing costs. If the seller agrees, many people think they just got free money. The reality is the seller has accepted $194,000 in their pocket. So you could have bought the house for $194,000, and paid your own closing costs. Instead you are buying the house for $200,000, and paying closing costs over time, versus out-of-pocket today.

It is a little more obvious to buyers that they are paying over time, when the same seller who wanted $200,000 refuses to budge, but you need closing costs rolled in to lessen your out-of-pocket burden. In this case, you’d restructure your offer to $206,000, and have the seller pay the $6,000 of closing costs. The seller gets what they wanted, and you rolled closing costs into the loan, again paying over time instead of out-of-pocket today.

Option 3) Lender Paid Closing Costs (also known as Lender Credits). Under this option, the lender will reduce your actual real closing costs by increasing your interest rate. You can choose to increase your interest rate a tiny amount, for a tiny reduction in closing costs, all the way to completely eliminating all of your closing costs with a much higher interest rate.

This isn’t a good or bad option, rather it is a depends option. How much reduction do you need? Do you have all the closing costs money today? How much higher will the payment be? How long will you live in the home?

TIP: ALL LENDERS HAVE ESSENTIALLY THE SAME TRUE CLOSING COSTS. When shopping lenders, many people will receive a closing cost quote lower than someone else, giving the illusion of a better deal. Many banks and lenders claims things like they give free appraisals, or never charge loan origination fees. No closing cost loans were all the rage a few years ago.

Little do many people realize that all these lenders are doing is increasing your loans interest rate to cover these items, but not telling you they are doing it. They don’t work for free, and someone has to pay the appraiser. This lower closing cost ploy makes unsuspecting home buyers potentially pick a lender based on a perceived better deal, when in fact, it isn’t. You pay, you always pay. How do you choose to pay? Lower rate = higher costs. Higher costs = lower rates.

Option 4) Any Combination. This is actually the most common way people pay closing costs. Many ask the seller to pay some, maybe increase the rate 1/8 or 1/4% to pay some, and maybe a little bit out-of-pocket to pay the rest.

CLOSING COSTS – THE BOTTOM LINE

It is very common for many home buyers through these options, to completely eliminate closing costs as an out-of-pocket expense, leaving them with just needing their down payment to buy the house.

So don’t ever let the fear of closing costs keep you from buying your dream home.

Millennials are not buying homes. Is this true or myth?

July 19, 2017 by Joe Metzler

There has been a lot of talk that millennials are not buying homes. Is this true or myth?

First, while the purchase numbers for millennials are down, millions of people buy homes every year, including millennials.

Most of the talk about millennials centers around the inability to purchase a home because of student loan debt. Studies after study does show that tuition costs are up, and that student loan debt has roughly doubled in the past 10-years. There is also a noticeable decline in homeownership rates among millennials the past decade.

Too much debt reduces the maximum amount of home lenders will allow someone to purchase. This is known as debt-to-income ratios. Less that 30% of your income spend on just the home is considered as a safe house payment, while under 45% of income should be spent on the house, plus car loans, credit cards, student loans, etc.

But is is all really student loan debt, or are there other factors involved.

Estimates suggest that around 35% of the decline in homeownership in the past 10-years is simply due to student loan debt. That leaves whopping 65% to other factors.

Assuming these numbers are accurate, and many suggest the student loan blame is not nearly as high as believed, I as an actual Mortgage Loan Officer, can attest that yes, student loan debt is a factor in some cases. But I see many other factors on a daily basis, the biggest being simply a low desire to own. This primarily resulting from observing their parents, friends, neighbors, and relatives suffer through the housing bust that started in 2007.

Other items I see include very poor credit, and a lack of knowledge on how credit and credit score work. Lack of down payment, and a lack of willingness to purchase a starter home. Many of the millennials believe they should jump right into a big, beautiful, white picket fence dream home as their first home.

Lack of Starter Homes?

I, like many people started with an old small home, in a not so perfect neighborhood. As I got older, got married, and increased our family income, I moved up into bigger and nicer homes, until now currently being in my existing “big beautiful home” for 19-years.

The me me me, now now now, pay for it later attitude really crept into society over the past 20-years. Having champagne taste for homes on a beer budget has held back more potential first time buyers from purchasing a home than most other items I see everyday. They simply refuse to buy a starter home.

Granted, a starter home today tends to have a heftier price then years back. As a percentage of income, low end starter homes suck up more of the owners paycheck than ever before. This too has a huge effect on first time home buyers, regardless if they have a college degree, and student loan debt or not.

Poor Credit

Another major issue I see is simply poor credit. As the days go by, it would appear to me that the population has become dumber and dumber about simple concepts, like paying your bills on time. It is very common for me to see potential home buyers in the 25 to 30-year old range have horrible credit. Then when they realize the poor credit prevents them from buying a home, it may take them a few years to improve their credit.

More than just student loan debt

The New York Fed recently reported that an estimated 360,000 people would have bought a in 2015 had tuition costs remained the same as they were in 2001. There is no doubt student loan debt has been a factor.

As an actual Loan Officer, active in the business currently, and having been so for more than 20-years, I am simply saying there are a multitude of reasons why people don’t buy homes.

The constant banter of it being student loan debt preventing ownership is heard by potential home buyers who have student loan debt. Many clients I speak to start out the conversation saying the don’t think they can buy a home because of student loan debt, and are very pleasantly surprised when I issue them a Pre-Approval Letter.

Of course every person and every situation is different.

Don’t Assume

If you want to buy a home, regardless of age, income, or student loan debt. DO NOT ASSUME. Contact a local mortgage broker in your area (I lend in MN, WI, IA, ND, SD). Give them a full mortgage loan application so they can zero in on your individual situation. You too may be pleasantly surprised, and enjoying the benefits of home ownership next month.

Why do I need mortgage insurance??

June 9, 2017 by Joe Metzler

Why do I need mortgage insurance?

When buying a home, and getting a home loan, being approved or not all comes down to risk. If the mortgage company thinks you are a good risk, you get the loan. If you are too risky, you get denied. Pretty simple concept.

A good example of this concept is down payment size. If you put at least 20% down, you are considered a good risk. Put less than 20% down, you are high risk. Needless to say, not everyone can put 20% or more down payment.

To minimize the lenders risk on small down payment loans, but yet allow for these same small and more affordable down payments, a tool called mortgage insurance, commonly referred to as PMI, or private mortgage insurance is available.

The insurance policy you are required to obtain and pay for as part of your monthly mortgage payment essentially provides protection to the lender in case you default on the loan, and covers the lender for the amount between 20% down and what you actually put down.

The cost of the mortgage insurance depends on multiple factors, but primarily down payment size, credit scores, and loan type.

The smaller your down payment, the higher the mortgage insurance costs. The lower your credit score, the higher the costs. For example, A client with 10% down and an 800 credit score on a 30-yr fixed loan might pay about $30 a month per $100,000 loan amount for mortgage insurance. The same 10% down, but a client with just a 640 credit score might pay as much as $105 per month per $100,000 loan.

Contact your loan officer for exact monthly costs for your individual situation and down payment size, as this article covers basic and most common situations, but does not encompass every possible situation.

Typicaly standard PMI will automatically fall off your loan once you reach 78% of the original loan amount with no interaction from the homeowner. It is simply automatic.

You can request to have mortgage insurance removed from your loan once you believe you are at 80% of the original loan. The 80% mark can be based on a combination of paying down the loan, and today’s appraised value. For example, you put 5% down when you bought the house, you’ve paid down through payments another 5%, and the home has appreciated 14% since you bought it. That would put you ate 76% loan-to-value. So contact your lender on their proceedure to have mortgage insurance dropped.

Must Deal With Mortgage Insurance

If you are putting down less than 20%, you MUST deal with mortgage insurance somehow. Other than monthly mortgage insurance, lenders can also offer more creative options. The most popular is known as ‘lender paid mortgage insurance’, where the lender increases your interest rate, and uses the extra money to buy mortgage insurance. You still have it, but it doesn’t show as a monthly cost.

The next is known as ‘single premium’ insurance. Under this option, you pay a one time lump sum amount up-front at closing equal to 3-years of monthly mortgage insurance.

The last option, is getting two loans. An 80% first mortgage, and a second mortgage to cover the difference from what you have for down payment. This is a viable option primarily for high credit, low risk clients, and for jumbo loans over $424,100.

While these options may sound enticing, for most people, balancing up-front costs, long-term versus short-term costs, and overall benefits based on individual situations can become a mind numbing challenge. Suffice to say the vast majority of people go with standard monthly mortgage insurance for a reason.

FHA Loan Mortgage Insurance

FHA loans also have mortgage insurance, but this insurance is significantly different from conventional loan mortgage insurance.

Most people using FHA loans put the minimum down payment of 3.50%, and take a 30-yr fixed loan. Most FHA mortgage insurance is the same for everyone regardless of down payment size or credit score. For small down payments, this is roughly $85 per month per $100,000 loan amount.Next, FHA mortgage insurance for small down payments is called ‘Life of Loan’ insurance, which means regardless of future loan-to-value, appreciation, or what you’ve paid down, FHA mortgage insurance never goes away. The only way to remove it is to refinace the loan.

Another item with FHA loans, is that regardless of down payment size, ALL FHA loans will have insurance. So contact your loan officer for exact monthly costs for your individual FHA insurance, especially if you are putting more than 10% down or picking a 15-year loan.

PMI is Not Homeowners Insurance

Mortgage insurance often times gets confused with home owners insurance. PMI protects the lender from default, while home owners insurance protects the owner for items like fire, storm damage, theft, etc.

VA Loans Have NO Mortgage Insurance

If you are active or former U.S. military, you have a great benefit in a VA Home Loan. Most people know VA loans generally do NOT require a down payment, they also have NO monthly mortgage insurance. This can be a huge monthly savings over other loans.

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Author Joe Metzler is a Senior Mortgage Loan Officer for Minnesota based Cambria Mortgage. He was named the 2014 Minnesota Loan Officer of the Year, and Top 300 Loan Officers in the Nation for 2010, 2015, 2016. He provides Home Mortgage Loans in MN, WI, IA, ND, SD. He can be reached at (651) 552-3681. NMLS 274132.

How much credit card use can effect your credit score

June 1, 2017 by Joe Metzler

Don’t lie on your mortgage application

May 6, 2017 by Joe Metzler

Minneapolis, MN: Home mortgage loans are one of the toughest loans you’ll ever apply for. The mortgage industry VERIFIES EVERYTHING. Credit, jobs, income, bank statements, tax returns, first born child, blood samples. OK, maybe not the last two… But we check just about everything else.

I’ve been taking mortgage applications for over 20-years, and it appears many people treat it like a resume… and feel it is OK to pad information, or leave information out in order to improve their chances of getting approved.

False information on a mortgage application is a federal crime.

You may not think a little white lie, or omission is a big deal, but fraud is fraud, even on a mortgage application. Few, if any people actual read what they sign, but the application does contain the following notice:

The information provided in the application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misinformation of the information contained in the application may result in civil liability, including monetary damages, to any person who may suffer any loss due to the reliance upon any misrepresentations that I have made on the application, and/or criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec 1001, et seg.

Yikes.

Lenders check everything (twice).

The lending process is paperwork intensive. We ask people to provide a lot of documents. While the vast majority of people are honest, you may be shocked at the number of forged documents we see. Prior to the real estate market crash, it was much easier for deceptive people to fool lenders with phony documents, as many of the items people provided were taken for face value, and no additional verification were done.

A common example would be an altered W2 statement, where someone scanned in to the computer, and used PhotoShop or other similar software to change a 3 to an 8, and shows $80,000 a year income instead of $30,000 a year income. That might have worked in 2006, but it doesn’t work today.

The electronic world we live in, and the tools available, simply will not let you get away with any of that anymore. Written verification of income with your employer, verification of W2’s and tax returns with the IRS. Verification of bank statements with your bank, fraud checks, and better credit reporting all work together to make it virtually impossible to commit this type of fraud.

I recently had a client who had a foreclosure that for some odd reason was not showing on the credit report. So they assumed we would never find out, and didn’t mention it. They also ‘lied’ on the application, as there is a question about having foreclosures. We found out, meaning all they did is was waste my time, the real Estate Agents time, the sellers time, processors, underwriters, and even their own money paying for inspections and appraisals on a house they could never buy.

Don’t fool yourself

You may be able to fool your Loan Officer up front, and get a pre-approval. This is because the initial pre-approval process generally does not encompass all the verification and fraud checks. Because these items cost money, lenders don’t usually do these additional checks until a home has been picked out, a purchase agreement signed, and the full file goes into actual underwriting.

Home Mortgage Loans in WI, MN, SD Nothing worse than to have found the perfect home, given notice to your landlord, packed all your belongings, only to find out the misinformation or omission has been discovered, resulting in a loan denial.

For Real Estate Agents, this is a common reason why a loan may die late in the process. Because of privacy rules, I generally only say a discrepancy of information has been discovered is the reason for loan denial.

Tell your Loan Officer everything

It may be tempting to fudge the details slightly, or even try straight up fraud. My best advice is to always complete a mortgage loan application with 100% accurate and truthful information, and to always tell your Loan Officer everything. It will be discovered anyway.

How higher mortgage rates effect you

March 22, 2017 by Joe Metzler

Minneapolis, MN: Face it, The super low mortgage interest rates are gone. Higher mortgage rates are here already, and it is very unlikely we will see them go back down anytime soon. Rather, it is anticipated that we should see 30-yr fixed rates into the mid 5% range by the middle of 2018.

mortgage interest rates up

HIGHER RATES = LESS BUYING POWER

As interest rates creep up, your buying power, or the maximum house price you can afford, goes down. As a ballpark quick way to think about it, every rate increase of 1% will lower the maximum house price by 10%.

A $225,000 loan at 3.75% is $1042 a month on a 30-yr fixed, while the same $225,000 loan at 4.50% is $1140, or $98.00 more per month. Another way of looking at it, is you would have to get a $206,000 loan to equal the same payment as the 3.75% rate on a $225,000 loan.

While neither of these should be deal killers for anyone looking to buy a home, it clearly has an effect on buying power, especially for First Time Home Buyers. So don’t delay, buy a home now while before anymore Fed rate hikes eat into your buying power.

For loans in MN, WI, IA, ND, SD, contact us today to discuss home financing options, or just get started with a quick, no obligation online loan application.

—— Fine print —

Rates samples only. This is not an offer to enter into an agreement. Any such offer may only be made in accordance with the requirements of MN stat. Sec 47.206 (3) and (4). Cambria Mortgage. 33 Wentworth Ave, St Paul, MN 55118. Equal Housing Lender. Not all customers will qualify. Information, rates, guidelines subject to change without prior notice. All loans subject to credit and property approval. Not all products available in all states or areas. Other restrictions and limitations apply. Licensed in MN, WI, IA, ND, SD. NMLS ID #322798.

Is Trump good for home loans?

February 2, 2017 by Joe Metzler

Is President Trump good for home loans?

Minneapolis, MN: Its only been two weeks, but clearly the new Trump Administration is driving a different road from the past administration. Only time will tell what this all means for real estate and home mortgage loans, but here are a few observations, most relating to a reduction in regulations.

After the housing collapse, legislators and regulators came down hard on the mortgage industry under the false belief that if you could fog a mirror, you automatically got a loan. While guidelines were looser, and third party verification of documents supplied by home buyer were lax, NO LENDER ‘knowingly‘ let the french fry guy at McDonald’s buy a million dollar home.

Were there a few bad players? Yes, But think of it more as it was easy to beat the system, as opposed to everyone in the mortgage world was a crook.

The Frank-Dodd financial reform laws, and the creation of the Consumer Financial Protection Bureau (CFPB) put the hammer down on many industries, not just mortgages. Of all the new regulations, only a few actually made a difference and make sense. The rest have cause home buyer costs to rise dramatically, added huge paperwork and delays to closing, and ultimately left many good people unable to buy homes because of unintended consequences.

It is expected that the Trump administration will go after many of the Frank-Dodd financial reform rules, and seek to reign in the CFPB, resulting in fewer rules, regulations, and paperwork. Meaning lower costs for home buyers, quicker closings, and less hassle to get a home mortgage loan.

A prime example is the CFPB designed a new ‘Loan Estimate‘, which replaced the ‘new’ Good Faith Estimate, which replaced the old Good Faith Estimate that existed since 1972. Today my clients are more confused than ever over the document and disclosures.

A second example is Loan Officers themselves. The rules put into place after the crash REQUIRE non-bank Loan Officers to go to school, pass difficult state and federal testing, and have mandatory continuing education. Sounds great, but Loan Officers at depository lenders (banks, credit unions, and lenders owned by banks or credit unions) DO NOT have to pass the same requirements of the S.A.F.E. Act. Don’t they all do the same thing? Why to bank Loan Officers not have to go to school, pass federal testing, or meet the same educational requirements?

Another example is that over the past 10-years, and especially the past 5-years, many lenders have pulled away from writing FHA loans. While not just for first time buyers, those are the people who primary use FHA loans. This was done because the Obama administration went after lenders from every angle under the False Claims Act for any minor error in FHA underwriting. Failing to cross even the most minor T, or dot the smallest I could have, and did, leave lenders with huge multi-million dollar settlements paid to the government.

I’m all for slapping the hands of people doing blatantly wrong things. But lenders are not stupid. If the government is going to come after you for minor items, why bother. It isn’t worth it. Those still offering FHA loans charge higher rates than needed to new buyers to offset anticipated government lawsuits. Someone has to pay those lawsuits, and it has simply been pass on to the consumer.

It is expected the Trump administration will have the CFPB and the Justice Department back off of their overzealous pursuit of lenders.

A smart balance of less unnecessary regulation, less paperwork, and a positive attitude towards business should be good for mortgage loans, the financial markets, home owners, and the country in general. It is way too early to tell, but lets all pray the county goes in a good direction.

FHA mortgage insurance lowered

February 2, 2017January 12, 2017 by Joe Metzler

FHA lowers monthly mortgage insurance

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UPDATE to this UPDATE:

The reduction in FHA mortgage Insurance has been (at least) temporarily paused before ever actually going into effect.

The FHA mortgage insurance rate reduction came as a giant unanticipated surprise to all of us in the mortgage world. I guess I should have figured something was up, as it appears the reduction was part of Washington’s political games.

The outgoing Obama administration people made the surprise reduction announcement with only days remaining in office. As soon as the Trump administration was sworn in, they immediately put the reduction on hold, stating it was irresponsible, and needed to be evaluated. This allowed the former administration to run around claiming how horrible the new administration was. Errr….

Personally, I think it is a bunch of crap that these people play with home owners, the mortgage industry, and the real estate industry, regardless of what side of the political fence you stand.

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Minneapolis, MN: HUD/FHA has announced that the required monthly FHA mortgage insurance costs are dropping with any new FHA loan closing January 27, 2017 and after. fha loans, fha update, fha mortgage insurance

For most FHA home buyers, this will mean a drop from .85% monthly, to just .60% monthly.

On a $200,000 loan, that means a monthly savings of $41.00 a month!

Combine the new lower FHA mortgage insurance, with the fact that FHA interest rates roughly 1/2% LOWER than conforming loans, and it is no wonder our FHA loans are so popular!

How to calculate FHA monthly mortgage insurance:

Take the loan amount times the insurance factor, then divide by 12
Example: Loan amount X .0060 / 12 = $ Monthly MI
$200,000 X .0060 / 12 = $100 a month

Visit my FHA LOAN page for more details, or dial 651-552-3681

Sharp spike in mortgage rates hurting real estate sales?

December 9, 2016November 22, 2016 by Joe Metzler

Saint Paul, MN: A sharp spike in mortgage rates since the Presidential election is showing minor signs of hurting home sales.

Mortgage interest rates have jumped from around 3.625% for the weeks leading up to the election, and now are averaging about 4.125% for the best clients on a standard 30-yr fixed rate loan. images999888

This quick jump does psycological damage for anyone currently in the market who were initially quoted the lower rates. But most buyers are not going to stop looking over this rate increase, as they generally are able to financially handle this quick jump.

The loan payment on a $200,000 home at 3.625% for 30-years is $912.10 a month, but at 4.125%, the payment is now $969.30 a month, or $57.20 per month more.

Another way of looking at it, is that with the slightly higher rate, a person would need to have a $190,000 to keep the same payment as the $200,000 loan they could have gotten a few weeks ago.

The rate jump has motivated many buyers to act now, especially as predictions are for rates to move a bit higher, before leveling off again. Of course no one knows for sure, but assuming rates will go a bit higher is the smarter assumption.

First time home buyers will generally be the ones most concerned and most effected by rate increases, but should be reminded that while rates are up slightly from just a month ago, from an historical standpoint, current mortgage rates are still some of the best ever in history!