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20% down NOT needed to buy a home in Minnesota

Minnesota Down Payment mortgage loansSt Paul, MN:   Question.  How much money do you think you need to put down to buy a home?

If you answered anything higher than ZERO, your answer is wrong!

Would it surprise you to learn that most people can get a mortgage with a great rate with just 3.5% down, and in some cases, zero down?  For most people, it is about the same amount of money you would spend on the first month, last month, and damage deposit on a rental property… but now, it is your home.

For some strange reason, the myth you need a huge down payment persists.  It simply isn’t true, yet I hear it all the time. I think it is because we hear it on TV.  I know I have. This is mostly from the talking heads on either coast. Many of those areas are what is known as “high cost” locations.  Anytime you go over $417,000 – you are now a jumbo loan, and jumbo loans are typically 20% down.  But for the rest of us…  Heck no, just 3.5% down!

  • FHA Loans are very popular, and only require 3.5% down
  • Good credit conventional loans only require 5% down
  • VA loans are zero down
  • USDA rural housing loans, for rural parts of the country, are zero down
  • Community programs can many times be used for your down payment to effectively get you zero down

Don’t let misinformation derail your dream of home ownership. Contact a local licensed mortgage professional to get pre-approved today.  Once approved, contact a great Real Estate Agent to find your dream home!

 

Minneapolis Weak and bad credit loans down since 2007

Minneapolis, MN:  Not much of a shocker here, but weak, and bad credit loans are down dramatically since the lending correction of 2007.   Part of the reason for the housing collapse was an immense community desire to allow everyone to have a home. Clearly, that experiment failed miserably. Simply put,  not everyone who wants a home loan deserves a loan, regardless of what liberal community activists say.

Mortgage loans written today, have some of the highest “quality” seen in underwriting history. New mortgage regulations pretend to provide important protections to borrowers, but have also lead to a permanent increase in the cost of originating loans to all borrowers, and a dramatic decrease in loans to those with poor credit.

deniedBetween 2007 and 2012

  • Home buyers with credit scores higher than 780 declined by 30 percent
  • Home buyers with credit scores between 620 and 680 declined by 90 percent
  • Home buyer with credit scores below 620 were virtually non-existent

Loans harder to get with no incentive

 

All loans are much more difficult to originate, process, and underwrite.  But small loan amounts, and especially small loan amounts combined with credit challenges require a huge amount of time and effort that loan officers can no longer be compensated correctly to work on.

In the past the loan officer and their company were rewarded and compensated for their extra efforts with problem clients. Today, loan officer walk away from them because there simply is no reward or incentive to help challenging clients.

Simply put, if you worked on a project for 10-hours, and got paid the exact same amount as you do on a 1-hour project, would anyone ever work on the 10-hour projects anymore?  Of course not… The government and community activists may disagree, but Loan Officers and lenders are in this business to make a living, not work for free.

Twin Cities home prices rise again

St Paul, MN: The most recent reports and data for the Minneapolis St Paul real estate market shows continuing signs of rebound with both increased home prices and increased building permits for new construction.

newconThe University of St Thomas’ monthly residential real estate price report index shows that the mediam sales price was up 6% over March of 2012, with the current average now 209,900.

Improvements to the housing market are attributed to an

New construction builders are also complaining about a lack of quality lots within the metro area that have current access to utilities. This forces builders to pay premium prices for prime lots, which of course increases the price of the new home.

 

Rates jump up after jobs report

lmrMinneapolis, MN:  Mortgage rates jumped up  at their fastest pace in two months after this weeks employment report, which showed that more jobs than anticipated were created in April.  Anytime we see good economic news, it tends to cause long-term mortgage interest rates to move higher.

Not only were April’s numbers good, the report also revised March’s numbers higher – which combined, added to the increase in mortgage interest rates.

While this all sounds like doom and gloom for anyone looking to buy a new home, or refinance their existing mortgage to save money – it just means that for a perfect customer, a 30-year fixed rate is back up to about 3.50%…  Hardly terrible news!

While we never know what mortgage interest rates will do, today’s rates are awesome.  There is very little room for downward improvement, and lots of room to move up.  I suggest locking in these great low rates, and never look back.

Weekly Mortgage Rate Report for April 27, 2013

ir-2Mortgage Rates Hit 2013 Lows, Big Week Ahead

Market Summary
Minneapolis, MN:   Mortgage rates finally made a break from a narrow range that’s persisted since April 15th.  They’d edged up to the top of that range by Thursday, but then made their first authoritative move lower to end the week at the best levels of 2013.

READ THE FULL REPORT

 

Average Home Buyer Numbers

fico_graphMinneapolis, MN:  According to a recent information from EllieMae, the average mortgage customer today has the following status:

  • Average credit score: 743
  • Average down payment: 19%
  • Average housing debt ratio: 25% of income
  • Average overall debt ratio: 35% of income
  • Average score of a denied client: 702

Where do you fit?

Do NOT let this fool you.  I was rather shocked to read this information. That doesn’t sound like my average customer!

Best advice? Contact a local licensed mortgage professional.  Provide them with a full application, and let them determine if you qualify for a mortgage loan with your credit score, your income, and your down payment size.

Minnesota Real Estate – A Sellers Market

St Paul, MN:  The latest report from the Minnesota Association of Realtors shows what we mortgage lenders already knew… That lower quality inventory is sparking higher prices across the state, but primarily in the Minneapolis / St Paul area.

real1The report for March showed the lowest number of homes currently on the market, at 11,784, since 2005. The report also shows the highest March average price for homes in four years, at $155,000 statewide.

The low inventory, combined with increased consumer confidence, and historically low mortgage rates, has created bidding wars on many properties, with the homes selling quickly, and ABOVE asking price.  This goes against the grain of what many home buyers think, that they can still make low ball offer on homes.  For the most part, low ball offers are a thing of the past.

More homes are expected to come on the market as we finally get some spring weather, but expect the fury of multiple offers on great, well priced homes to continue.

Your best bet to make a successful competitive offer is to be fully Pre-Approved, from a LOCAL reputable lender, and to be working with experienced knowledgeable real estate agents.

 

Economy stimulated by low mortgage rates

Minneapolis, MN:  As mortgage rates continue to hover near the all-time historic low rates that we saw last November (2012), the nation’s overall economic outlook has seemed to improve.

saveIn November 2012, rates fell down to levels that had not been seen since 1971. While current rates are not at all-time lows, they are just slightly above those rates, and at levels that have not been seen since January.

The low mortgage rates are helping to stimulate the recovery of the housing market. They low rates have helped to increase home sales and home refinances. Many current homeowners have taken advantage of the low rates by refinancing their home loans, freeing up money to be spent elsewhere.

While the Federal Reserve plans to continue to keep mortgage rates low through the purchase of mortgage-backed security bonds, mortgage rates are not likely to stay this low forever. CNN Money expects that as the economy continues to improve over the course of the year, mortgage rates will begin to rise this fall – but just slightly.

Taking advantage of mortgage rates while they remain low is essential. First time home buyers can afford to purchase a property that is on average 20 percent more expensive than they were when mortgage rates were in the 4-5 percentile range. Refinancing to shorter term can also help buyers pay off their home in less time and lower their monthly mortgage payments.

Lack of quality homes for sale causing problems

Minneapolis, MN:  Who would have thought we would be saying this, but strong demand for housing is now running into supply problems, according to the National Association of Realtors® (NAR), and what I see and hear from my mortgage clients everyday.
real1Homes For Sale:
The lack of quality supply in homes for sale, especially in the under $150,000 price range in the Minneapolis / St Paul area if very evident with the number of clients unable to find a home that doesn’t need a lot of repair.  Any home in good condition, and priced right for today’s market is selling very fast, with multiple offers, and within just days of being put on the market. Home buyers need to be pre-approved, and ready to immediately offer full price.
Nationally, signed purchase agreements  in February and NAR’s Pending Home Sales Index slipped 0.4 percent from the previous month.

The Index, an indicator of future home sales, dropped to 104.8 from a revised 105.2 in January, but is still at a recent high, second only to April 2010 when it reached 110.9 shortly before the end a government home buyer tax credit program.  The index was 8.4 percent higher than a year earlier when it was 96.6 and February marked the 22nd month that contract activity increased on an annual basis.

On a regional basis the Index declined 2.5 percent in the Northeast but was 6.8 percent higher than a year earlier at 82.8.  The Midwest was up 0.4 percent month over month to 103.6 and 13.2 percent year over year.  Pending home sales in the South slipped 0.3 percent to an index of 118.8 in February but are 12.1 percent above February 2012.  In the West the index increased 0.1 percent in February to 101.4 but is 0.8 percent below a year ago.

The National Association of Realtors expects existing-home sales to rise about 7 percent in 2013 to approximately 5 million sales, which is near the current level of activity.  The volume of home sales appears to be leveling off with the quality inventory problems, and the leveling of the index means little change is likely in the pace of sales over the next couple months.

Because of limited inventory of quality homes,  NAR also expects the median existing home price to increase about 7 percent, while they expect mortgage nterest rates to slowly move up to closer to 4% by the end of the year.

Mortgage Rates for week ending March 16th, 2013

Minneapolis, MN: Freddie Mac yesterday the results of its Primary Mortgage Market Survey(R) (PMMS®), showing average fixed mortgage rates rising this week on stronger signs of jobs growth and consumer spending. ir-2The 30-year fixed averaged 3.63 percent, its highest reading since the week of August 23, 2012. The 30-year fixed hit its average all-time record low of 3.31 percent the week of November 21, 2012.

News Facts

  • 30-year fixed-rate mortgage rates averaged 3.63 percent with an average 0.8 point for the week ending March 14, 2013, up from last week when it averaged 3.52 percent. Last year at this time, the 30-year FRM averaged 3.92 percent.
  • 15-year fixed rate mortgages this week averaged 2.79 percent with an average 0.8 point, up from last week when it averaged 2.76 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.
  • 5-year adjustable rate mortgages (ARM) averaged 2.61 percent this week with an average 0.6 point, down from last week when it averaged 2.63 percent. A year ago, the 5-year ARM averaged 2.83 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates rose this week on stronger signs of jobs growth and consumer spending. The economy added 236,000 new workers in February which helped push down the unemployment rate to 7.7 percent. This helped offset the effects of the payroll tax holiday expiration and led to a 1.1 percent increase in retail sales, which was well above the market consensus forecast.”

Freddie Mac was established by Congress in 1970 to provide liquidity, stability and affordability to the nation’s residential mortgage markets. Freddie Mac supports communities across the nation by providing mortgage capital to lenders. Today Freddie Mac is making home possible for one in four homebuyers and is one of the largest sources of financing for multifamily housing.

————

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

First time home buyer tip

Minneapolis, MN:  As we start to enter the spring home buying season here in Minnesota, I have one big tip for first time home buyers.

welcome2_FTHB_1Buying now makes sense. If you have OK credit, a little bit of money for down payment, and you’ve been successfully renting for a year or two, you are ready to buy now. With the combination of affordable housing prices and low mortgage rates, there has never been a better time to become a home owner.

First Time Home Buyer Tip: Talk to a Loan Officer FIRST.

Most people do it wrong. They start looking at homes on the internet. Then they contact a Real Estate Agent and start looking at homes. Seems logical, but wouldn’t it make more sense to know if you can even get a loan, how much you can afford, what down payment is required, and what purchase prices you can qualify for first?

With that knowledge in hand, now you can start looking for homes you know you can afford, and what the payments, and loan programs would look like for you.

I feel bad when people have already found a dream home, only to be told for various reasons they cannot buy it. Don’t let this happen to you.  Get pre-approved with a local mortgage broker BEFORE talking to a Realtor.

Not only does it make sense, but your Real Estate Agent will appreciate that fact you are pre-approved so they can immediately focus on providing the best service to you without slowing things down while you get approved. Or, worse yet, having to completely refocus the search because of newly discovered information from a mortgage lender.

Shopping for an Interest Rate?

Minneapolis, MN:  Thinking of refinancing your home?  Are you a First Time Home Buyer?  Homeowners have thousands of choices when it comes to shopping for their mortgage loan, and sometimes all these options can spell trouble.

Pretty much every phone call I take starts with “What’s your interest rate?” While this seems like a very logical question to ask, it doesn’t give the lender all the information needed to give you an accurate answer.

rates_compareThis goes for online mortgage interest rate search tools too.  While you may put in some basic information, I haven’t seen a system yet (including ours) that could ever replace a actual Loan Officer and be 100% accurate.

There is no generic rate: A common misconception is there is a “rate”…   We’ve all hear the commercials… “The rate today on a 30-yr fixed is ____, and only at so and so company.”  I cry foul!  The only way you can ever get an accurate interest rate quote is to supply a mortgage company with a complete application, and the lender also reviews a credit report.

Credit Score: To accurately quote you an interest rate, a lender has to run your credit to determine your credit score. Interest rates can vary greatly on some programs depending on credit score. Most loan programs have pricing adjustments based on credit score, so without looking at your credit, any lender quote is just guessing.  While I like to believe what people tell me, until I see for sure, it doesn’t mean anything.  I can not tell you how many times someone has said “I have excellent credit,” (which is a 740 middle credit score or higher), so I quote them based on that score,  only to actually review their credit the next day to find out their score is a 700. On some programs, the difference between a 740+ score, and a 700 score could mean as much as 1/4% (.25) higher interest rates!

There are at least 21 criteria that goes into determining your interest rate.  Here is a small sampling:

  1. Credit score
  2. Loan program
  3. Loan Size
  4. Down Payment (or equity position)
  5. Owner-Occupied or Investment
  6. Closing cost options

I consistently hear, after I’ve taken a full application and accurately quote a client “That’s different than I saw (online, in the news paper, on TV).” The general attitude is that  my quote is high.  The reality is you are usually comparing an accurate quote against teaser advertising rates, or rates that do not apply in your situation.

So be mindful of the difference between advertising and reality.  Let a professional Licensed Loan Officer (NOT A BANK), review your complete application for an accurate quote.

 

Can’t refinance – Maybe you can with HARP – Find out here

HARP 3.0 ???  Help for underwater home owners

St Paul, MN:  Virtually, all homeowners have lost value on their homes in recent years.  For many, this has created some challenges to refinancing and taking advantage of today’s super low mortgage interest rates.

There are a few programs with can help, depending on what type of mortgage loan you have today.  May people have successfully used program like HARP (Home Affordable Refinance Program), the FHA Streamline Refinance, or even the VA Streamline refinance known as an IRRRL loan.

Sadly, not everyone fits the criteria.  Therefore Washington has been floating the idea of an expanded HARP 3 Refinance ProgramIt doesn’t exist yet, and may never exist…  But if it does, here is what it may look like:

There are some basic criteria for the #MyRefi or HARP 3 refinance program:

  • Current loan is NOT backed by FHA, USDA, Fannie Mae, Freddie Mac
  • Primary home only. No second homes or investment home
  • Loan less than $750,000.
  • On time mortgage payments for the past 6 months, with no more than one 30-day late payment in the past year.
  • Credit score above 580

This new HARP 3 refinance program proposal mirrors the current HARP 2.0 refinance loan program (possible no appraisal, less document, etc), except it would potentially also allow any underwater home owner, not just those who have a loan owned by Fannie Mae or Freddie Mac.

Try out the governments “Would I qualify for a refinance” below..

30-Year Fixed-Rate Mortgage Averages 3.40% for week ending Jan 3, 2012

lmrMinneapolis, MN:  Freddie Mac yesterday released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates moving higher following December’s employment report. The 30-year fixed averaged 3.40 percent, its highest reading in eight weeks. The all-time record low for the average 30-year fixed was 3.31 percent set November 21, 2012.

News Facts

  • 30-year fixed mortgage rates (FRM) averaged 3.40 percent with an average 0.7 point for the week ending January 10, 2013, up from last week when it averaged 3.34 percent. Last year at this time, the 30-year FRM averaged 3.89 percent.
  • 15-year fixed mortgage rates this week averaged 2.66 percent with an average 0.7 point, up from last week when it averaged 2.64 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.
  • 5-year adjustable mortgage rates (ARM) averaged 2.67 percent this week with an average 0.6 point, down from last week when it averaged 2.71 percent. A year ago, the 5-year ARM averaged 2.82 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Fixed mortgage rates increased slightly following a positive employment report for December. The economy added 155,000 jobs, above the consensus market forecast, and November’s job growth was revised upward by another 24,000 workers. This helped keep the unemployment rate steady at 7.8 percent, the lowest since December 2008. For all of 2012, 1.86 million jobs were created and represented the largest annual gain since 2006.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.

Mortgage rates bounce near records lows for week ending 12/14/2012

Mortgage Rates Mixed, 30-Year Fixed Averages 3.37 Percent

ST Paul, MN:  Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing fixed mortgage rates mixed following data reports on inflation and the housing construction market. The 30-year fixed moved up averaging 3.37 percent, while the 15-year fixed eased to 2.65 percent, both remaining near their record lows.

News Facts

  • 30-year fixed-rate mortgages (FRM) averaged 3.37 percent with an average 0.7 point for the week ending December 20, 2012, up from last week when it averaged 3.32 percent. Last year at this time, the 30-year FRM averaged 3.91 percent.
  • 15-year fixed rate mortgages this week averaged 2.65 percent with an average 0.7 point, down from last week when it averaged 2.66 percent. A year ago at this time, the 15-year FRM averaged 3.21 percent.
  • 5-year adjustable (ARM) mortgages averaged 2.71 percent this week with an average 0.7 point, up from last week when it averaged 2.70 percent. A year ago, the 5-year ARM averaged 2.85 percent.

Quotes
Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac.

“Mortgage rates were mixed this week following data reports on stable inflation and a thriving home construction market. The 12-month growth in the core consumer price index has remained between 1.9 and 2.1 percent for the past five consecutive months ending in November. Meanwhile, housing starts averaged the strongest three months in November since September 2008, and homebuilder confidence rose in December to its highest reading since April 2008.”

Freddie Mac’s survey is the average of loans bought from lenders * last week, including discount points. Applicants must pay all closing costs at these rates. No cost loan rates higher.

Follow this link to view today’s best MN and WI mortgage interest rates.