U.S. home mortgage applications for purchases fell to a nearly 15-year low last week as resurgent worries about the strength of the economy kept buyers at bay, an industry group said on Wednesday.
Home Buyers
Information and news for home buyers, especially first time homebuyers
Is it a gift for down payment, or mortgage fraud?
…. From NASDAQ
A genuine gift, meaning no repayment is expected or implied, can help you qualify for a mortgage. But a “gift” that is really a loan in disguise could be problematic or even considered loan fraud, a federal crime with serious consequences.
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Phony rate quotes, slick advertising, bait-n-switch… beware
Shopping for a home mortgage loan? Despite Government efforts, the industry is still full of slick advertising, phony rate quotes, and bait-n-switch offers from home mortgage loan companies and banks you probably don’t want to really do business with. Joe Metzler explains…
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Need a home mortgage loan in MN or WI? Try www.StPaul-mortgage.com or www.mortgage-duluth.com
QRM: Three letters that will wreck the housing market
QRM. Three letters that will wreck the housing and economic recovery of this nation. Find out what QRM (Qualified Residential Mortgage) means, and how it is going to effect you.
Shopping for a Mortgage Lender. Inside scoop on how to choose one
Shopping Around For A Mortgage Lender?
Here is THE INSIDE SCOOP on how to IDENTIFY A PROFESSIONAL MORTGAGE LENDER, BROKER, and LOAN OFFICER
HERE ARE FOUR SIMPLE QUESTIONS your Loan Officer absolutely MUST be able to answer CORRECTLY. IF THEY DO NOT KNOW THE ANSWERS – RUN, DON’T WALK RUN TO A LENDER THAT DOES!
1) What are mortgage interest rates based on? (The only correct answer is Mortgage Backed Securities or Mortgage Bonds, NOT the 10-year Treasury Note. While the 10-year Treasury Note sometimes trends in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions. DO NOT work with a lender who has their eyes on the wrong indicators.)
2) What is the next Economic Report or event that could cause interest rate movement? (A professional lender will have this at their fingertips. For an up-to-date calendar of weekly economic reports and events that may cause rates to fluctuate.
3) When the Fed “changes rates”, what does this mean and what impact does this have on mortgage interest rates? (The answer may surprise you. When the Fed makes a move, they are changing a rate called the “Fed Funds Rate”. This is a very short-term rate that impacts credit cards, credit lines, auto loans and the like. Mortgage rates most often will actually move in the opposite direction as the Fed change, due to the dynamics within the financial markets. For more information and explanation, just give us a call)
4) What is happening in the market today and what do you see in the near future? (If a lender cannot explain how Mortgage Bonds and interest rates are moving at the present time, as well as what is coming up in the near future, you are talking with someone who is still reading last week’s newspaper, and probably not a professional with whom to entrust your home mortgage financing.)
One additional important aspect, is also understanding that not all Loan Officers are licensed. Be sure to only work with a licensed professional. You can verify a Loan Officer has a license by going to www.NMLSconsumerAccess.org
Be Smart… Ask Questions, and Get Answers!
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(C) 2011 – Joe Metzler – Cambria Mortgage, St Paul, MN #274132.
The newest NEW Good Faith Estimate for 2011
On January 1, 2010, the government came out with a new Good Faith Estimate document for home buyers. The new document, supposedly designed to help consumers better shop for a mortgage, was and is a complete flop.
A year later, they are testing a new, new Good Faith Estimate from the new Consumer Financial Protection Bureau. You can give your input to the CFPB… Watch to learn how.
What do YOU think? Is this one a flop too? Post below!
Zero Down Home Loans Are Back
Zero down payment home loans are back. Actually, some of them never went away. VA and USDA Rural Development are two very popular home loan options. Learn more by watching this ROYAL performance… CG LIVE from London!
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Tough Real Estate Market? What are buyers and sellers supposed to do?
The real estate market today is one of the toughest in recent history. A large number of foreclosed homes on the market is marking it tough on the traditional home seller. While every market is different, most areas have seen a significant drop in value.
The mortgage industry has tighten lending, with a virtual elimination of all non-traditional financing and “creative” zero down type options (although VA and USDA are still around and great zero down options). Most programs today require 3.5% to 5% down MINIMUM and good credit. Gone are the days of easy lending.
Washington has tried “fixing” mortgage lending, but has essentially failed with bad programs like FHA Secure, Help For Home Owners, HARP, and HAMP. They’ve made industry changes that have cost home buyers more money, like HVCC, and LO Compensation. They’ve created more confusion with the new three page Good Faith Estimate, and the whopper of them all… Only requiring half of the Loan Officers to have a license!
Traditional sellers have the upper hand and an easier time in most cases in the “condition of the property” category versus a foreclosure, but it is still very tough when the banks are liquidating foreclosed properties, and the prices they are giving some of them away at.
So, what is a seller and buyer to do? How does a seller sell and a buyer buy in today’s market?
First, understand that because of the large volume of foreclosed properties, it is a great time to be a buyer, whether you are a move-up buyer or a first-time buyer.
For sellers, now is not the time to try and sell your own property. You need the help of a FULL-TIME, experienced Realtor to help guide you through the process. Buyers need the same help to guide them through the maze of properties, both traditional and bank-owned. Having a good agent is extremely important. Take some time to interview your Realtor. How long have they been in business? How many sales have they completed? How many buyers have they helped? Can you get references? Don’t just pick your agent from an open house, or use your sisters best friend who got her license last month.
For move-up buyers, you may have to give in to a lower than you like selling price, but you should reap a nice reward on any new home you buy. This is especially true if you are moving from the low $200k to the mid $300k range, as homes that were selling in the $400k range are now in the $350k. Therefore, even if you have to give up a little on your current sale price, you should more than make up for it on the buy side. Remember, a house priced right, and realistic, will sell even in today’s market right away. Furthermore, with today’s standard fixed rates hovering around 5%, you can still lock in historically great rates!
For first-time buyers, it is a great time to find aggressively priced homes, whether it is a bank-owned foreclosure, or a motivated traditional seller. Not all buyers are ready, or want to tackle “AS IS” foreclosures, so be sure to be honest with yourself about what you are doing to avoid a potential disaster down the road.
Today’s prices are again extremely affordable in the first-time buyer starter home category. Even though most zero down programs are no longer available, with proper negotiation, you can get the seller to pay most, if not all of your closing costs.
This means you can buy a $150k home for just $5250 out-of-pocket. With programs like FHA, the entire down payment can be a gift from family members, or community assistance programs. That is how it was always done prior to about 1999… and somehow people bought houses then, so don’t sit back waiting. NOW is the time to buy!
Finally, one of the first things you should do is get pre-approved with a quality lender who will discuss with you your qualifying ability and program options in today’s market. Someone who has the knowledge, expertise, and full range of programs (like FHA) to bring you to a successful no surprises closing. This is never the guy on the internet posting the lowest rate, or the unlicensed bank representative at the 1-800 number bank call center.
A word of caution. If you are shopping for a lender based on rate, be prepared to get screwed. Be sure to read these informative articles for more information: “Rate Shopping – How to do it right“, and “Lender Shopping – How to do it right“.
No matter what your real estate needs are, buying or selling, with the proper guidance of full-time professional Realtor and Loan Officer, you should be able to have your dreams come true.
The credit bureau is selling your info. Here is how to stop it
Getting a mortgage loan? Beware of the credit bureau.
You’ve shopped a few lenders, gotten some quotes. You’ve narrowed your search, supplied a full application, and supporting documents. The lender has now pulled your credit report, and informed you everything looks great. You lock your interest rate, and move forward.
Suddenly, you are overwhelmed with telephone calls and an overflowing mail box with offers from competing mortgage companies. What is going on?
Sadly, there is a new and horrible marketing trend called “trigger lists”. Because the lender and pulled your credit (they had to), they triggered an unintended event.
The credit bureaus have found another way to increase their revenue at your expense, and WITHOUT YOUR PERMISSION.
Having credit checked is an important and necessary step in the home buying process, as well as something that is done for many other legitimate reasons. Very few people realize that each time your credit is
checked, an “inquiry” is generated on your personal credit report.
The credit bureau’s are now selling your “inquiry data”, including name, address, phone number (even unlisted), credit score, current debt, debt history, property information, age, gender, and estimated income. They are selling all this personal and confidential information to anyone who writes them a check!
These low life mortgage lenders purchase these leads at a premium price. They then will do, and say anything they can to recoup their investment and turn a hefty profit. Bait and switch tactics are being used to lure clients away from their reputable lender. Many of our clients have even been called by these disreputable lenders and told that the lender they had been speaking to previously “passed on” the information to them!
The good news is you can make it stop immediately. The consumer credit reporting industry has provided a way to “opt out” and remove your name from these lists. You can contact them by phone at
1-888-567-8688 or online at www.optoutprescreen.com.
You certainly have the right to shop for the best professional to meet your lending needs. This should be done on your terms, when and how YOU chose. Unfortunately at this time, these unsolicited marketing tactics are a nuisance and intrusive, but perfectly legal.
Our company, Cambria Mortgage, and my team are doing everything in our power to limit these credit report abuses. We suggest you call your representatives to let them know how you feel too.
Take the time to protect yourself from identity theft and unwanted solicitations. OPT-OUT NOW!
Are No Doc loans still available?
“NO DOC” loans had been around for years, and served a niche market for the self-employed, commission, and tipped income home owners. Because of their additional risk, they came with higher interest rates, bigger down payments, and generally were only available to self-employed people with a minimum of 2-years provable self-employment history and trouble documenting their true income.
As the home loan markets changed through the early 2000’s, these loans grew in popularity, especially once Wall Street introduced new no doc, stated income, stated assets, no job, and other ridiculous variations with underwriting guidelines so silly almost anyone could qualify for a home loan.
These new variations turned a small niche program into what became commonly known as liar loans. This was because because both customers and Loan Officers were easily allowed to misrepresent the borrowers true circumstances. They were highly abused by consumers, and bad loan officers everywhere, as people realized they could easily get a loan they either should not be getting at all, or more commonly, to get a bigger loan than they normally would have received.
These liar loans were one of the first casualties of the mortgage market meltdown as many of these customers were some of the very first people to end up in foreclosure. Lenders everywhere quickly pulled them from their product lines, and many states now have laws on the books banning them completely.
Unfortunately, the self-employed, commissions, and tipped income people who truly need and benefited from stated income, no documentation (NINA, NIVA, NISA, SISA) type loans are now without loan options. The old saying, one bad apple spoils the whole bunch… In this case, it was a whole bunch of bad apples that spoiled it for the one who really needs it.
If you are looking for a respectable No Documentation loan, you are pretty much out of luck, unless you are:
- In a state that still allows them
- Have excellent credit
- Are in need of under 65% loan-to-value
- Are willing to pay huge up-front costs and very high interest rates to “hard money lenders“
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Looking for a “no doc” loan in MN and WI?, Can you still get financing? Maybe, but not without fully documenting your ability to repay your loan.
But, don’t give up just yet. Let a licensed professional loan officer review a full application.
MORTGAGES for SELF-EMPLOYED, and COMMISSIONED INCOME Clients
MORTGAGES FOR THE SELF-EMPLOYED, COMMISSIONED, or TIPPED INCOME Clients
Self employed individuals often ask … “Why is it so difficult to qualify for mortgage financing?”
Minneapolis, MN: Self-employed borrowers, those who work on commission, or those who receive tipped income present one of the most challenging areas of mortgage underwriting. Qualifying self-employed people often requires significant extra time, energy, and patience. A fair and honest pre-qualification requires a special set of Loan Officer skills and expertise.
Long gone are the days when any Loan Officer could give a low doc, no doc, or stated income loan to a self-employed borrower, commission, or tipped income client without any training or special consideration.
Generally speaking, it’s tougher for the self-employed buyer to qualify for a mortgage because it is hard to answer the question: “What is your income?”
What did you earn, what did you write off? Taking advantage of tax laws to reduce income is great for reducing tax liability, but also shows you make less money, making a potential home mortgage loan approval difficult.
Next lenders are looking to see a income history. Is income increasing, decreasing, or stable? This all comes into play for self-employed, commissions, and tipped income home buyers and those same type clients interested in a refinance of their existing home loan.
Today, lenders are back to the old way of providing mortgage loans, and the vast majority of Mortgage Companies, and especially Mortgage Loan Officers are either afraid to work on a self-employed persons home loan, or simply lack the extra knowledge and skill required to get self-employed people a home loan.
Reading, understanding, and qualifying a buyer off of tax returns is not for the weak of heart, or unlicensed bank reps working at a call center.
Self-Employed and Commissioned DOCUMENTS REQUIRED:
Be prepared to send us the following documents. We will be unable to assist you or evaluate you mortgage loan qualifications without them:
- Last two years personal tax returns (all pages, All schedules)
- Last two years business returns if employed through a corporation (all pages, all schedules)
- Current Year-to-Date P&L (Profit and Loss Statement) and Balance Sheet
We will also require the traditional standard home loan approval documents:
OTHER INCOME
- Copy of most recent two (2) years W-2 statements (for you and any co-borrowers)
- Copy of pay stubs covering the last (30) thirty days (for you and any co-borrowers)
ASSETS
- Copy of most recent monthly bank statements (ALL PAGES. If it says “page 1 of 3”, I need all 3 pages no matter what is on them.
- Copy of most recent statements on 401K, IRA, or Mutual Fund Accounts
- Copy of most recent brokerage statement for any stocks, bonds or certificates of deposits (or copies of actual certificate)
LESS THAN 2-YEARS SELF-EMPLOYED? YES, it is possible… But it is an exception and NOT easy to get approved. You will need to have worked in the exact same field, with a similar income, and have at least 1-yr of self employed Federal Tax Returns
Are you being pressured by your Realtor to use “their” lender?
Are you being pressured by your Realtor to use “their” lender?
Minneapolis, MN: When buying a home, unless you have cash, you are going to need financing! As a consumer, you have the right to pick whatever lender you decide is best for you. You will likely also receive all sorts of lender suggestions from those around you, and maybe even high pressure to use specific lenders.
My take on the state of the industry and why you are being pressured to use a specific lender follows one of three scenarios:
- You have a competent real estate agent who is concerned about the transaction closing. If they have never worked with the lender you plan on using, they are naturally concerned about that lender’s ability to perform. More often than not, this is an unfounded in fact fear, perpetuated from hard to close sub-prime loans that long ago disappeared from the market. More often than not, simply having your lender and Real Estate Agent talk to each other will address the Real Estate agent’s concerns. If they are both competent professionals, they’ll recognize that in each other and problem solved.
- Most real estate agent today work at a company that has their own lender. The agent is under enormous pressure from management to refer all buyers to the in-house lender. Why is that? Because most of the profit from the real estate operation accrues from the in-house mortgage and title company operation, and not from the real estate side. You will almost always find that the rates offered by the in-house mortgage lender are higher than what you could find from other lenders. The in-house lender knows the statistical evidence that 75% of home buyers accept the first rate offered to them and set their profit margin accordingly. If the lender your agent is recommending is offering you higher rates than another lenders you judge to be competent you now know why their rates are higher – they are responsible for producing excess profit for the parent organization. Your choice whether you want to pay for that excess profit or not.
- The agent is getting an under the table kick back from the lender – yes illegal, and unfortunately, yes it continues to occur. The specific agent themselves is getting a monetary kickback, their advertising paid for, or some other form of payment by the lender or specific loan officer. While very rare, it does happen.
If the rates offered by the recommended lender are higher, it is pretty simple – you are not getting the best deal in the market. You are paying for someone’s additional profit. That “someone” could be the big bank name as their rates are higher to pay for all of their fixed overhead and advertising. It could be the real estate company that depends upon extra mortgage affiliate profit to pay the commission splits they are offering to real estate agents, or something else.
Most buyers focus on the monthly payment difference between rates and end up thinking something like, “the agent wants me to use this specific lender and the monthly payment is only $15 dollars more, so who cares”. What you’re missing is the present economic value difference that an .125% or .25% higher rate means in dollars today.
What I mean by that – if the recommended lender is offering you a 5.00% rate and other qualified and competent lenders tell you they can off you a 4.75% rate, the important number is not the $15 or $30 per month difference. The important number comes from asking the 4.75% rate lender, “What is the dollar amount of the lender closing cost credit you will give me if I do the loan with you at 5.00%?” Another way to look at it is this, at 4.75%, maybe your closing costs are $6,000, but at 5.00%, your closing costs are only $4,000.
That is the dollar amount that could have been in your pocket, but if you give in to the pressure, and instead transfers to someone else’s pocket. When you are getting that level of pressure, someone has a vested interest in who you obtain your mortgage through.
Bottom line: Talk to the Realtor’s suggested preferred lender if you want, but be sure to talk to one or two other lenders, then YOU CHOOSE who YOU WANT.
(C) 2011 – Joe Metzler – Mortgages Unlimited, St Paul, MN #274132. Re-blog but do not steal!
We lend in MN and WI ONLY. Searching rates on home loans, rates for refinancing your mortgage in MN or WI. We have some of the best rates on home loans!
Fannie Mae HomePath offers 3.5% in closing costs (temporarily)
Fannie Mae temporarily offers 3.5% in closing cost incentive to home buyers purchasing a Fannie Mae HomePath eligible foreclosed home.
But wait, beware of the small print… this is a limited time special incentive offer…. Watch to learn more
Search for HomePath Homes in MN and WI
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What is HomeSteps and HomePath?
You’ve seen the logo’s, but what is HomePath and HomeSteps?
The HomePath and HomeSteps programs allows a person to buy a specially designated Fannie Mae or Freddie Mac owned foreclosed property with a low down payment, flexible mortgage terms, no lender-requested appraisal and no mortgage insurance. Expanded seller contributions to closing costs are allowed as well
How Does It Work?
Simple. Just follow these steps:
- Apply with a lender. Get Pre-Approved. Just qualify for a traditional financing with at least 3% down.
- Meet with a Realtor – Look at homes, buy your dream house. You MUST select a home to buy from a special list of available foreclosed properties
- Close and move in!
Where can I see the list of available houses?
Easy. Contact a Real Estate Agent, and they’ll show you a list of qualified HomePath and HomeStep properties.
What about closing costs?
Closing costs can be rolled into the transaction, up to 6% of the loan amount.
How do I get started?
It all starts with a no obligation application, and a visit to a special lender offering the programs.
Buying a home in MN or WI? Click here for a HomePath, HomeSteps lender in MN and WI, or call (651) 705-6261, where one of their specially trained Loan Officers will assist you.
New Rules for First Time Home Buyers
It is a great time to be a first time home buyer, but some of the rules have changed. Mortgage interest rates in MN are still amazing, and home prices are super affordable. New mortgage lender and broker rules are making it a little harder to qualify for a home loan, and your costs are going up a little, but don’t let that hold you back. First time home buyers, it’s safe to come out now!
- Plan on a down payment. The bigger the better
- Plan on living in the home 5-years
- Be prepared for competition on homes – Don’t be so picky
- Get Pre-Approved with a Qualified (and licensed) Mortgage Loan Officer
Smart financial move, the 15-yr mortgage
Smart financial move, the 15-yr mortgage
Minneapolis, MN: “I own my home free and clear!“. How great would it be to say that? No payments when you retire. No payments while you are also paying for college. Putting money into your 401k vs paying it to the bank.
Look into a shorter term mortgage. This is the hottest new trend in home ownership.
Your parents probably took a 30-year fixed rate FHA mortgage, then tried to pay extra along the way to pay it off early in hopes of having no payments going into retirement.
During the period of 2001 – 2008, it was just the opposite. Many people opted for an adjustable mortgage, interest only mortgage, or even a 40-year mortgage. The reasoning was they would be flipping the house in a few short years at a great profit, so they didn’t really care what the payment was.
Today, old school thinking on the fast plan of a shorter term home loan is very popular. Me me me, now now now, has been replaced with a pay it off fast mentality.
Clearly a shorter term loan saves you a lot of money in interest. On a $200,000 loan at 4.75%, the payment (just the loan) is $1043 per month. The total interest paid is a whopping $179,888. Switch that over to a 15-yr loan at 4.25%, and the payment goes up to $1504 per month, but the total interest is just $75,079. Half as much! A interest savings of $104,809
Many people claim they can’t afford the 15-yr payment, but I say otherwise. The average person can usually easily absorb the slightly higher payment with a little discipline and a slight adjustment to their monthly budget.
Eliminate the second new car, go out to a nice dinner a little less often, and shutting off the cable or satellite premium service all start to add up quickly, giving you one of the best savings opportunities of your lifetime.
I also hear many people talk about the loss of the interest tax deduction. I have a challenge for you. Can you tell me exactly what your tax write off benefit was this year? Most people can’t. The tax deduction is over-rated. Once you figure out how little it really adds up to in real dollars, you’ll quickly see the benefit of paying your home off faster.
Stop pissing money away on a 30-yr mortgage, refinance to a 15-yr mortgage. Earn equity faster, own your home in half the time, and make one of the best financial moves of your lifetime.