Home Buyers – Page 6 – Minnesota Mortgage and Real Estate Daily Blog

Tips to getting a better mortgage loan

February 12, 2014 by Joe Metzler

Minneapolis, MN: Tips to getting a better mortgage loan are all over the internet, and everyone seems to have an opinion. When buying a home, almost everyone is going to need to get a mortgage loan. So knowing the tips of where you get that loan can effect service, programs, rate, cost, and more. Here are a few tips I suggest understanding:

So where to get a mortgage?

Banks, brokers, credit unions, and mortgage companies all offer loans in MN. Most offer the exact same loan programs, but not everyone offers everything. For example, it is fairly common for small banks and credit unions not to offer FHA loans or VA loans.

Historically many people start with what I call their place of comfort. That is almost always whatever institution has their checking account. There really isn’t anything special here, but many people call it “their bank”, and wrongly believe because you have an account there already, you’ll get a better deal. Sorry, but that simply isn’t true.

Since the age of the internet, a web search for a mortgage company is another popular starting point. You’ll find a wide range of banks, brokers, credit unions, and local mortgage companies. There is nothing wrong with searching the internet for a mortgage company, except you need to understand that some out-state lender or the big internet companies names you see on TV CAN NOT offer you anything better than the local lender down the street.

Finally, about half of all people when buying a home simply use the mortgage lender the Real Estate Agents suggests. This is where I believe so many home buyers make a fatal, and expensive error.

Beware of Realtor In House or Preferred Lenders

When your Real Estate Agent suggest a lender, there are two types.

In House or Preferred Lender: Generally these companies are either owned by the real estate company, or have some kind of official partnership. Many times they have similar names. XYZ Real Estate sending you to XYZ Mortgage, but not always.

The Real Estate Agents work very hard to drive you to the in-house financing for a simple reason. They make money doing so. No matter what they say about convenience or anything else, it is all about making more money for their company. As you can imagine in this situation, you are generally NOT going to get the best deals in the market. Furthermore, just because they are the Real Estate Companies preferred lender, doesn’t make them good.

Outside Referral Partner: Generally speaking, these referrals companies do not have any sort of official relationship with the Real Estate company the agent works for. The Realtor is referring you to this Loan Officer simply because they have proven to have the knowledge, expertise, and the programs the clients need and want. The Loan Officer has proven themselves to be a great referral partner. The Real Estate Agent and the Real Estate Agents Company are making nothing extra when you select this lender. The agent and their company has no financial gain. Their only interest is based in you getting the best possible deal for you (not their company) and having someone they trust on your side.

Another tip? The worst referral partners… Builders… But I’ll save that for another article.

Choosing a Loan Officer

The first big thing to understand is about the Loan Officer you choose. You want your largest financial transaction handled by an experienced professional. So look for someone with well documented industry experience. I suggest at least 10-years at a minimum.

Next, realize that Loan Officers at depository lenders (banks and credit unions), and mortgage companies owned by a bank or credit union, are NOT required to have a license, are NOT required to have any schooling, and DO NOT need to pass any state or federal testing.

Loan Officers at non-depository lenders (brokers and direct mortgage companies) ARE REQUIRED to have schooling, continuing education each year, and pass stringent state and federal testing requirements.

I’m not saying any one individual Loan Officer is better or worse, but face it. I would prefer a licensed person versus an unlicensed person. So how do you know if your Loan Officer is licensed? You don’t unless you ask or check through the national loan officer database. All Loan Officers must have a tracking number known as an NMLS number. Don’t be fooled, an NMLS number is NOT a license number.

Giving the two choice of referral partners, and knowing what you’ve just read… Which one would you choose?

Down Payment Assistance Programs in MN

February 12, 2014 by Joe Metzler

DOWN PAYMENT ASSISTANCE PROGRAMS

MHFA Start Up and Step Up down payment assistance programs in MN for First Time Home Buyers

Have $1,000? Have OK Credit? Than YOU can be a homeowner.

The biggest hurdle for many first time home buyers is the lack of down payment money. With the down payment assistance programs from the Minnesota Housing Finance Agency – you can buy a new home today, and be enjoying it next month!

TWO MINNESOTA DOWN PAYMENT ASSISTANCE PROGRAMS

START UP Program

The Start Up assistance program is for people who have NOT owned a home in the last three years.

STEP UP Program

The Step Up program is for people who currently do, or may have owned a home previously. Both of these program assist with up to $10,000 is down payment assistance to those who qualify. Most people get much less. Typically up to just $5,000.

MORTGAGE CREDIT CERTIFICATES

By adding a Mortgage Credit Certificate option, first time home buyers can potentially save up to an addition $2,000 on their taxes.

Click or call to learn more about the benefits of mortgage credit certificates in MN (MCC)

WHO QUALIFIES FOR DOWN PAYMENT ASSISTANCE?

As with any assistance program, there are additional rules and guidelines that need to be followed. Here is a basic list of requirements:

Credit score above 640 (middle score of all applicants)
Attend Home Buyer Education Class or take the online class
Meet family Income Limits
Buy an affordable home
Provide previous three years tax returns
Meet FHA, VA, USDA, or Fannie Mae / Freddie Mac underlying loan guidelines

The rules and guidelines for first time home buyer and down payment assistance programs in MN are a bit overwhelming for most potential new home owners. We suggest you don’t try to figure it out yourself… Rather, simply call us at (651) 552-3681, or fill out a full online application. Our licensed professional Loan Officers will review the application, zero in on the best loan for you, then contact you to discuss your options, all with NO COST and NO obligations whatsoever.

Click here For FULL RULES and GUIDELINES on the Minnesota Housing Finance Agency Down Payment Assistance Programs

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.

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.

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.

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.

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.

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.

New home construction WAY UP

December 4, 2013 by Joe Metzler

Any one with half an eye open knows these monthly housing reports bounce like a yo-yo. This month up, last month down, so the long term average is where to focus. New home sales are up 21% over the past 12 months ending October 2013. That is a good sign!

After a drop in Sept. 2013, sales of new single-family homes in October 2013 saw their biggest month-over-month increase since May of 1980, according to data released today by HUD and the Census Bureau.

New single-family home sales were at a seasonally adjusted annual rate of 444,000 in October, according to a report by the Census Bureau and HUD. That’s 25.4% above the revised September rate of 354,000 and 21.6% above October 2012’s rate of 365,000.

The October rate is also considerably higher than the 425,000 projected by economists. However, new home construction is still less than half what it was at its pre market crash – which arguably was artificially high, and not a valid comparison to today’s market

Prices on new homes also fell slightly, but this is attributed to smaller average home sizes compared to just a few years ago.

The seasonally adjusted estimate of new houses for sale in October was 183,000, according to the Census Bureau. At the current sales rate, that equates to a supply of 4.9 months. The median sales price of new houses in October was $245,800. The average sales price was $321,000.

Selling your home in the winter – Myth or Fact?

December 3, 2013 by Joe Metzler

I hear it all the time. Homes don’t sell in the winter. Sounds legitimate, but the facts simply do not bear this statement out to be truthful.

Are there less homes on the market in the winter? Yes. Statistics show about a 30% drop in active home buyers versus the peek summer months.

Big deal…

Realize this… There are fewer homes on the market for sale, so when the more serious buyer comes out in the wintertime to buy a home, YOUR HOME gets more showings because you have LESS COMPETITION!

Good homes priced right sell quickly all year round.

Interest rate forecast for 2014

December 2, 2013 by Joe Metzler

Everyday, I am asked “what are mortgage rates going to do?”

No one has a crystal ball, but here are a few reasons we should expect mortgage interest rates to be higher in 2014.

1) New mortgage rules starting in 2014 are going to make getting mortgages harder, take longer, and cost you more money to obtain. Lower debt to income rations, new forms, qualified mortgages, the CFPB, and more are all expected to take a significant toll. Remember, Barney Frank, Chris Dodd, and all the others said their brilliant financial reforms would save you money… All I’ve seen is high costs!

2) Economists at Freddie Mac have indicated they expect interest rates to be in the 5’s throughout 2014 because the economy is getting better (albeit slowly), and the Federal Reserve is expected to stop artificially propping up the mortgage market, with their buying of mortgage backed securities

3) Affordability indexes are falling.

The good news is, there’s still time to take advantage of low refinance rates and new home purchase programs now if you’re a consumer.

What you should know before buying a home in MN or WI

November 22, 2013November 21, 2013 by Joe Metzler

What should I know before buying a home in MN or WI?

Here are some tips that could save you a lot of time, money and trouble.

Plan ahead. Establish good credit and save as much as you can for the down payment and closing costs.
Get pre-approved online before you start looking. Not only do real estate agents prefer working with pre-qualified buyers; you will have more negotiating power and an edge over homebuyers who are not pre-approved.
Get a REALISTIC housing budget and stick to it. Talk to your Loan Officer about debt-to-income ratios
Know what you really want in a home. How long will you live there? Is your family growing? What are the schools like? How long is your commute to work? Consider every angle before diving in.
Make a reasonable offer. To determine a fair value on the home, ask your real estate agent for a comparative market analysis listing all the sales prices of other houses in the neighborhood.You don’t want to over pay, and you don’t want to waste everyone’s time with unrealistic low ball offers.
Choose your Lender carefully. Roughly 80% of Loan Officers are simply unlicensed application clerks. Only work with a licensed Loan Officer. TIP: An Loan Officer NMLS # is NOT a license. Ask them if they are licensed or simply registered. Verify a Loan Officer at www.NMLSConsumerAccess.org. At the bottown of the page, if one or more state licenses are listed. They have a licensed. If it says Federal Mortgage Originator, they are NOT licensed.
Choose your real estate agent carefully: A real estate license legally allows someone to practice real estate – it doesn’t mean they are good. Check experience, references, etc. Also, under NO circumstances should you ever use the homes listing agent as your buying agent.
Consult with your lender before paying off debts. You may qualify even with your existing debt, especially if it frees up more cash for a down payment.
Save for down payment: While some first time home buyer assistance programs are available, you are much better off, and have many more options if you have your own money for down payment. Try to have at least 3.5% for an FHA loan, but 5% for a conventional loan is much better.
Keep your day job. If there is a career move in your future, make the move after your loan is approved. Lenders tend to favor a stable employment history.
Do not shift money around. A lender needs to verify all sources of funds. By leaving everything where it is, the process is a lot easier on everyone involved.
Do not add to your debt. If you increase your debt by financing a new car, boat, furniture or other large purchase, it could prevent you from qualifying.
Timing is everything. If you already own a home, you may need to sell your current home to qualify for a new one. If you are renting, simply time the move to the end of the lease.