There are many things to be thankful for from the air we breath to the dirt we walk on and everything in between.
So please take time this week to be thankful for all the wonderful and glorious things we get to see and experience in our lives.
OK you want to buy a house, now what? Buying a home is great and there are plenty of articles on the benefits etc. But let;s talk about just buying a home. More specifically, the financials associated with buying a home.
Can you afford it? The most basic qualifications allow you to finance and purchase a home with ratios as high as 45-50% of your gross income. Though most agree a number in the 33-38% range would be more preferred. So even today, we as lenders are able to offer a homebuyer good financing and allow for a reasonable amount of debt to income levels.
How much money do I need to bring in to close? Just because you are putting down 10% doesn’t mean you won’t bring in a amount at 10-15% of the sales price. In addition to the down payment most buyers will need to bring in interest and taxes for a prorated amount of time, you also may need to bring in closing costs for escrow, title, recording, notary, transfer tax, hoa fees, appraisal, tax service, etc etc. Many of these fees can be credited by the lender for an increased interest rate, or by way of seller or broker credits. These amounts and percentages may be capped on some mortgage programs.
How much documentation does it take. Pretty much everything over the last 90 days from bank statements to paycheck stubs, Your gonna need a ton of information, But if you are organized and retain your records as recommended you should be fine.
Get your trusted mortgage advisor involved before you start shopping. Get Pre-Approved by a lender like me to know EXACTLY what you are getting into.
This business never ceases to amaze me. Today, I was able to get an approval for a client who was OVER 180 DAYS DOWN on their mortgage just last year. Their credit scores were over 700 already and they even had a few small paid collection accounts.
The moral of this post is; don’t assume you are declined or can’t get an approval until you have researched all the possibilities with a qualified licensed mortgage originator. You may be surprised by what you find out.
Ok.. finally it’s over. All the ads, misrepresentations and taking everything out of context is over for a while – maybe.
Now we have to look at our businesses and determine where we think we are headed with current administration. This morning the market adjusted a fair amount and to the down side, with Treasury’s rallying – resulting fantastic mortgage rates. It’s a good day to lock, but where are we headed?
In my opinion, the Obama administration means we will see a longer period of low mortgage rates than we would have had with Romney. You will also see government maintain a greater share of mortgage lending backing. With recent announcements from Freddie Mac on earnings, its clear the government and the GSE’s are enjoying making money again.
I think with the Obama admin you will also see a consistent barrage of new government intervention, compliance, audits, rules and regulations being continually beat with. Best case is we will continue to see consolidation in our industry as the purchase market continues its uptick and refinances continue to moderate after big rate drops.
The continued government involved will continue to limit private party money from entering the ring.
This will limit the pace of new mortgage products. Although a few may be able to navigate the government waters for reassurance that dipping their toes into the water won’t get them bit off.
I had an interesting coversation with a client yesterday. The clients are making offers on properties and the listing agent made it clear that – FHA offers were not going to be accepted. It reminded me of a classic Blazing Saddles scene where everyone is accepted except for the Irish (rough language kids). Now at first glance this could be perceived as racist and I am sure some would make that arguement that it is. However, the truth is the uneducated Realtor makes that assumptions themselves.
The methaphor is clear, that there is a preconceived belief that FHA loans are harder and slower to close than a conventional loan. As an Origintor that does both, I can tell you that any loan can be difficult and it makes relatively no sense what product is necessarily chosen.
Of course there are exceptions, most notably condominiums. There are cases where a project is not HUD approved and as such cannot typically be financed with FHA funds.
But other than that, Realtor should educated themselves about the FHA process which is much more streamlined that in years past, and as a FHA approved lending institution, I have first hand knowledge that HUD or the local HOC’s have little involvement in the FHA lending process once a lending institution is approved.
So stop limiting the real estate recovery and sell to FHA borrowers!
You may not realize it but not only are you probably receiving poor service from your big bag of…I mean Big Bank, but you are also hurting small business (Big Bank Article). Smaller direct lenders and mortgage brokers can typically offer more attractice programs and pricing along with providing better overall service.
It sound strange to think a small company that may actually sell your loan to a big bank could offer terms better than that same big bank. But it’s true. Smaller lenders and brokers have found ways to cut costs and create better operating efficiencies than their bigger counter-parts and in many cases pass those savings onto the consumer.
So next time you thing about a refinance – give the little guy a try!
Also, If you are interested in FICO scores… and how the hell they became so damn important – read this post.
I received a good amount of positive feedback on my post regarding waiting periods after significant credit event such as BK, Foreclosure, Short Sales etc. So for those that missed it, please click the link and share with whomever you like. Please keep in mind many factors other than these affect the ability to receive an approval for a new home purchase and its best to consult a certified mortgage banker such as myself.
Watching CNBC today and it amazes me that the press is talking about tight mortgage credit.
OK if you compare credit guidelines today versus 2005-2006 yes, it’s tighter.
If you write off all your income and try to hide from the tax man, access to credit is limited. But you and I both know if you aren’t paying ALL your taxes, you don’t deserve the lowest rates available.
Those rates are always going to be for those who can document their income.
But the fact is Roughly 69% of American homeowners with mortgages at the end of the second quarter had rates of 5% or higher and about 33% of them had rates above 6%, according to detailed mortgage data provided to The Times by Santa Ana research firm CoreLogic.”
So why haven’t these people refinanced? Most likely, valuation, credit score or credit issues, or, and I hear this a lot. They want to wait for lower rates! Really? With the G- Fee increase and QEIII coming to fruition, don’t bet on it. The banks and large lenders are just going to take the increased profits.
In 24 years I’ve never seen rates this low, and that’s becuase they’ve never been this low.
So if you haven’t looked at refinancing, take a look today, even if you refinanced over the last 18 months.