Karl's Mortgage and Related Info Site

SAFE Mortgage Licensing Act was created to "encourage" a nationwide licensing and registry system.  In the next few years, individual states will:

1. Establish a minimum net worth for recovery fund requirements.

 

2. Require originators to register with the National Registry and obtain a unique identifier number. This will help regulators track individuals and prevent originators who receive complaints in one state from starting a new origination practice in another state.

 

3. Develop a state license program.

 

4. Require pre-licensure education.

 

5. Require eight hours of continuing education every year.

 

The bill helps homeowners who are currently upside down on their homes and owe more than their homes are now worth.

 Mortgages must have been originated prior to January 1, 2008.

 Borrowers must:

 

1. Certify that they did not default intentionally (there is penalty of jail if they are found to lie here).

 

2. Have had a DTI ratio over 31% as of March 2008.

 

The lien holder will work with the borrower to write down the mortgage to no more than 90% of the appraised value. For example, if a borrower owes $300,000 but the home is worth $250,000, the borrower will receive a new loan for 90% of $250,000, which equals $225,000. The $75,000 difference is forgiven.

 The lender shares equity in the property going forward, on a sliding scale:

 

1. If the home is sold within one year, the lender receives 90% of the appreciation and the home owner receives 10%.

 

2. If the home is sold within two years, the lender receives 80% of the appreciation and the home owner receives 20%.

 

3. If the home is sold within three years, the lender receives 70% of the appreciation and the home owner receives 30%.

 

4. If the home is sold within four years, the lender receives 60% of the appreciation and the home owner receives 40%.

 

5. If the home is sold after five years, the lender receives 50% of the appreciation and the home owner receives 50%.

 

The floor for Jumbo Loans will remain at $417,000, despite the depreciation in home prices.

The ceiling for Jumbo Loans will decrease from $729,750 to $625,500 as of January 1, 2009

To use Seller Funded Down Payment Assistant (DPA, Nehemiah), final underwriting must be completed by September 30, 2008. This type of DPA will not be available after September 30. Two out of every three FHA loans are currently using Seller Funded DPA so it is important to act now!

FHA minimum cash investment requirements are increasing to 3.5%, from 3%.  

MIP will increase after October 1, 2008. HR 3221 increased the cap on MIP from 2.25% to 3%. Per FHA policy, FHA has filed the amount they want the cap to be with the Office of Management and Budget (reported to be between 2.25% and 3%, but closer to 3%). This is another reason to act now!

Visit www.Hud.gov for FHA loan amounts in your area.

Earlier this year, as part of the "Mortgage Meltdown", Fannie Mae and Freddie Mac instituted what they call Loan Level Price Adjustments.  The basic concept is that borrowers getting a mortgage may be subjected to a higher cost depending on their credit score and loan-to-value(LTV).  The lower the credit score and/or the higher the LTV, the more it would cost to borrower money.  This cost could be passed along in the form of higher closing costs and/or higher interest rates.  They broke down credit scores into 20 point ranges and LTV into 5% ranges.  Depending on which box you fall into on the chart, that determined the adjustment.

After re-evaluating these changes, additional updates took affect ealier this summer, again increasing the expense of riskier individuals to secure a mortgage.  Here we go again...

As of November 1st, another round of adjustments will become effective.  This is actually good news in that the change was initially scheduled to take effect October 1st.  With the new changes, most people with credit score below 720 or less than 25% down will pay more for their mortgage.

Any buyers that are on the fence need to get off now and buy a home.  Even if the house prices have not bottomed out yet, any savings gained from a lower sales price could easily be lost due to a higher rate.

Good luck and good selling.

Choosing the right person to represent you in negotiating your home purchase is a major decision. Whenever you see the designation of REALTOR® (with a registered trademark) you can rest assured that person is a member of the NATIONAL ASSOCIATION OF REALTORS® (NAR), and has a commitment to meeting the standards of the organization. My team and I have a network of professionals that have done a great job for our clients in the past, and we can provide you with a referral to a qualified representative, and pre-approval to shop as a cash buyer.

How will you know which REALTOR® is right for you?

Seek to work with an experienced Real Estate professional that works with buyers on a regular basis. A real pro will go the extra mile to show you that they will look out for your best interest and gain your respect. Sincerity is a key word here. This type of Real Estate Agent will act promptly to get you information about their team and their methods of doing business, along with quotes and references from past clients.

Once you set an appointment to meet with a Real Estate Agent and his/her team, they should be rolling out the red carpet for you. You should have a personal introduction to each person you are expected to have contact with throughout the buying process. They should go out of their way to establish a long-term relationship with you, rather than thinking of you as a one-time transaction.

An experienced buyer's representative will ask many questions regarding your goals rather than tell you what they think you want to hear. He/she will also take your finances into consideration so that they can help you make the purchase you qualify for. They will seek to exceed your expectations in every way by having a system in place that provides complete customer satisfaction.

What can an experienced REALTOR® do for you?

An experienced professional will have access to the computerized Multiple Listing Service (MLS), which changes daily. He or she can provide you with new listings to consider as they become available, and will also include important demographics and market value information on the area you are seeking to buy a home. This person will serve as a strong negotiator on your behalf and provide guidance every step of the way. In the long run, using a trained professional will save you time and money. It is important to let your Real Estate Agent know what your goals are so he/she can eliminate the listings that do not meet your criteria.

Likewise, it is equally important to let my team know what your goals are so we can provide you with financing that fits your current and long-term goals. Our job is not just to close a loan for you, but to help you build a strong financial future by assisting you with managing that debt in the future. We use an extensive database system that allows us to run reports and determine when refinancing is appropriate and beneficial.

Call me directly for help finding a qualified REALTOR® you can trust.

I wanted to share with you some creative ideas that I recently read about for helping increase traffic at open houses and hopefully sell more homes:

1) Agents can offer $5 gas cards as a small gesture to acknowledge the car ride over to view the house.

2) For pet-friendly homes, REALTORS® can allow potential buyers to bring their pets along. This is a great way to motivate passionate pet-lovers who see their pets as family members.

3) Agents can give out quarts of gourmet ice cream. Not only is this a special treat to fight heat, it also forces potential buyers to head directly home, avoiding any other open houses on the way, so they can put their ice cream in the freezer.

4) REALTORS® can provide shoe shines during an open house. If buyers have to remove their shoes anyway, why not offer this service?

If you try any of these ideas, please let me know if you have any success.

Good luck and have a great day!!!

United First Financial is hosting a webinar to helping explain their Money Merge Account and how it is used to achieve accelerated debt payoff.

For anyone AND everyone that would like to help their Church AND     ALL Churches around the country, PLEASE attend a very special     Webinar THIS Wednesday from 2:00pm - 2:30pm.       To "pre-register", please go to www.usauff.com. It's FREE!!     ( after you "pre-register", you will get your own confirmation       sent to your personal email unique to you and you only )       This is hosted by Pastors who are U1st Agents.       Please PASS THIS ALONG to anyone AND everyone. We     have the ability to help tens of thousands of people improve     the quality of their financial lives forever.

This a concept I have been starting to learn more about and would welcome the feedback of anyone that chooses to attend this webinar.

Thanks

Welcome to another Monday.  As is the case these days in the mortgage business, I just received an update regarding policy changes.  Being a correspondent lender, we regularly get updated from the various investors/banks we work with to keep up abreast of their latest changes. 

The latest update I just received states effective August 13th, non-traditional credit is no longer allowed for FHA loans.  All borrowers on FHA transactions must have a traditional credit history. 

Also effective the 13th, seller funded down payment assistance programs (i.e. Nehemiah) are no longer accepted.

One of the results of the "mortgage meltdown", as the media so fondly likes to call it, has been the effective elimination of the sub-prime market.  As the sub-prime market dissolved, FHA has become the new sub-prime.  FHA has seen an influx of poor performing mortgages enter their portfolio.  As this happens, we can anticipate that FHA guidelines will continue to constrict.

FHA has been a great outlet for many borrowers and it will continue to be.  With that said, buyers need to be kept informed and need to realize that requirements are continuing to change.  Yes, they will actually have to prove their worthiness to borrower the money they want to use to purchase a home.

As always, make sure your customers are pre-qualified or pre-approved by a trustworthy and reliable loan officer prior to placing any offers on a home.

Points are up-front fees paid by the borrower to obtain a better interest rate on a loan. One point equals one percent of the loan amount. And while a lower interest rate may result in a lower monthly payment, it is important to consider how long you intend to be in the loan and to compare current interest rates to historical market trends. This will help you to determine whether paying points is a worthwhile investment.

Let's look at a sample scenario. If you take out a $300,000 mortgage and decide to pay one point in order to lower your interest rate, this would translate into an up-front cost of $3,000. To keep things simple, we'll assume that paying this one point will save you $50 a month. This means it will take you 60 months to recoup the cost of that point. If you decide to refinance or sell the home before the 60-month mark, your money is lost â€" not to mention the opportunity cost of not having this money invested elsewhere. In this scenario, you would only benefit financially from paying points if you were to remain in the home for no less than 60 months.

It's also important to remember that interest rates run in cycles. When rates are at historical lows, it makes more sense to pay points if you plan to live in the home for an extended period of time. If it's unlikely that rates will go down in the near future, then there will be no need to refinance.

When interest rates are high, however, there is a strong likelihood that they will come down again before too long. Therefore, this is not a good time to pay points. The chances of refinancing in the near future are extremely high, and you will likely not be in the loan long enough to recoup the up-front cost of the points.

Tax deductibility is another thing to consider when choosing whether or not to pay points. For new purchases, interest from both points paid and your mortgage are tax deductible up front. For refinances, however, points are not deductible up front. Instead the deductions are spread out over the term of the loan (unless the entire loan is paid off early), making points more costly in comparison.

Ultimately, there's a lot to consider when it comes to points and whether or not they are a worthwhile investment. An experienced mortgage professional will work with you to determine the best course of action based upon your specific situation. Request a comprehensive cost comparison to see whether paying points could be financially beneficial to you.