Mortgage Discussion for the Panhandle area

As we are all aware the number of foreclosures in our Nation still drag down home prices. What if more people could buy these homes? What if they could get help with down payment and special financing? Would that help keep values stable? This economy has put a great deal of pressure on bank REO departments to sell homes and we can all take advantage.

Fannie Mae is selling foreclosed properties with special financing under a program called Home Path. They allow up to 97% financing, no mortgage insurance and no appraisal. They will even help pay up to 6% in closing cost and the 3% down payment can be a gift. Just go to http://www.fanniemae.com/homepath/financing/index.jhtml go get more information and find out what homes qualify. My office is a Home Path approved lender so let's close some.

Freddie Mac has a similar program with special financing and will also be aggressive in selling homes. Just go to http://www.freddiemac.com/homepossible/hp97.html for more information on this Freddie Mac Version. My office is also approved for Home Possible Financing opportunities.

Another bit of help comes from some Federal Funds called Neighborhood Stabilization Program. This program, similar to SHIPP, allows Federal Funds for use in down payment, closing cost and in some cases even principal reduction. This program used in conjunction with Home Path, Home Possible, FHA, USDA, VA or any conventional loan gives us another boost in buying power. Learn more about this and more available funds at http://www.santarosa.fl.gov/housing/ and Yes, again, America's Mortgage Experts is approved to help with these funds as well.

As you can see Fannie and Freddie along with the Federal Government is pushing to help move these properties. Learn what you can and call us for any questions or to allow us to help your customer find that perfect deal.

As many of you are aware the Federal Reserve raised the discount rate by .25% yesterday. The discount rate is now .75% and marks the first time since June 2006 that the Fed. raised this rate. The media was very quick to point out that this discount rate was not the "short term interest rate" that effects rates such as Prime Rate for credit cards or mortgage rates. Well, is that true?

I am looking at rate sheets for this morning and realizing how wrong the media is on a daily basis. What make us think the banks are going to pay .25% more to borrow money and NOT pass along the cost to the consumer? Either we really have nice, thoughtful banks that would never do anything to get the American people in a mess like this or we are just being fooled again.

Let us not be fooled any longer and try and get the word out that great things are happening in real estate today. We all need to act quickly and get in on the ground floor. Yes, this was a true sign that interest rates will be moving up. I, however, do not believe that is a bad thing. It may serve us all very well. Think about the "fence setters" who have been watching for a sign of better times. Think about that young couple wanting to buy a home but waiting for rates to hit the impossible 3%. Will they move now on a new contract? Will that reluctant investor get off the fence and start buying?

I think these questions are up to us in the real estate business. Will we market successfully against the main stream media and get the positive word out or will we all talk about the good old days and allow this opportunity to pass?

I for one want to take advantage of this market and close many good loans the next few months. All I ask of you is help me market the truth about what is happening in real estate and of course send your customers here for a mortgage quote.

As Mardi Gras is in full swing and 2010 purchase contracts begin to close, I wounder which is sweeter. A king cake (and finding the baby) or a real estate closing? I guess if you break it down a King cake adds calories and a choking risk and a closing adds money. That being the case I will for go the parades, beads and sweets.

Short sales seem to be one area that is bogging down the real estate market. Buyers think they can wait it out and get a great deal leaving homes stagnate on the market. In the end they normally do not get any better deal than a normal sale. Why do we not as an industry try and educate the buyer that the time to buy is now and you will loose the tax credit if you wait for that "pie in the sky" deal?

I tell my customers that between the tax credit and other government treats, that waiting on the best deal my very well cost them in the long run. Just think SHIPP, Neighbor Stabilization, and many other housing programs are currently funded but for how long? We got news today that the Federal Reserve will ease then stop helping the financial industry in the form of buying Treasuries. That will raise rates itself without the Fed raising rates boldly. If a customer signs a contract today for a short sale they will, more than likely, loose the tax credit, any down payment assistance and the lower rates. Is it really worth it?

The mortgage industry is moving and it is hard to get an idea what direction we are going. I alerted you last blog of the tightening for FHA loans coming. We also see more strength in jumbo lending and Beach (resort) lending which could be looked at as loosening of credit. We will have to watch over the next few months and see.

100% deals (USDA and VA) are still closing and FHA will not change until April. We are still closing FHA down to 580 credit score with good last twelve months. Jumbo are also picking up as those with higher incomes are getting restless now. Send me your deals and we will find a way to close them.

The mortgage industry is trying hard to find an identity to hold. Problem is, this is a ever changing market with influence in all different directions. We all need to be aware of changes and proposed changes that will affect future decisions. I want to discuss some of these changes so we can prepare.

You may already be aware but as of Jan. 1st 2010 we started using a new Good Faith Estimate. This monster is just stupid and very confusing for customers. The government says they wanted to make the GFE easier to read and did just the opposite. For example, the new good faith does not itemize fees like the old GFE or a HUD-1. The new GFE does not include some important information like the old GFE. It does not give you a PITI (Principal, Interest, Taxes and Insurance) payment and does not mention the cash needed to close. In one hand, I like it because I do not have to explain every fee any longer the fees just do not show up anywhere but a total. One the other hand, closings will be a trick because that is when the itemized fees will show and there will surely be questions. The first week of January I just said "no big deal, I will give my customers the old GFE along with the new one the law requires." Wrong again, I was informed that HUD will not allow us to give out any form similar to the old GFE. I wanted to make sure my customer and realtors would see the itemized fees, PITI payment and the cash needed for closing but our government said I cannot show these items. This really does not make sense to me.

The home buyer tax deductions for first time home buyers and non-first time home buyers is set to expire on April 30th. This is a change we all knew but now time is running thin. I wanted to remind everyone this date is getting close.

Another date to make sure you are aware of is April 5th. On this day FHA will increase the up front mortgage insurance premium from 1.75% to 2.25%. This will raise payments and make qualifying just a little harder for some on the fence customers. The increase was needed to sure up the FHA insurance program against the current losses in the real estate market.

Most everyone is aware of HVCC or Home Valuation Code of Conduct but did you know on February 15th all FHA and USDA loans will follow the HVCC guidelines? This will mean no matter what type of mortgage loan (Fannie, Freddie, FHA, VA, USDA, Reverse and Construction) no one will be allowed to pick a certain appraiser for any reason. This sounds on the surface like easy and a fair check and balance but dealing with the process for months now on conventional loans I will tell you it is a mess. As an example, all appraisals must be paid for by credit card. No checks at the door anymore. What if your customer does not have a credit card or does not have $425 in room on a credit card? No more lookups to see if the home would likely appraise. You either pay the full fee or don't.

Other FHA proposed changes that currently do not have a date will include changing the maximum seller paid closing cost from 6% to 3%. This will force new home buyers to have that much more cash to close if the changes are approved. Another change being seriously looked at is raising the minimum down payment from 3.5% to 5% for high credit score borrowers. Those with credit scores below 660 will need up to 10% down payment for an FHA insured loan. Again these are proposed changes but will greatly impact a customers ability to purchase if acted upon.

Wow, this is a rather long blog for me but there are dates and changes we all need to be prepared for coming up. We are still closing FHA loans with as little as 580 in credit score. Our USDA loans are still moving many people into new homes and Santa Rosa County has new SHIPP funds available. Please call me if you have any questions.

Please send me some new customers so we can close before the changes.

Wow, the great rates are back again for a Christmas showing. Purchase and Refinances with rates around 4.5%. That should be good news for any fence sitters. Rates are very good and we are still closing 100% loans. This along with the tax credit of up to $8,000.00 for "First Time Homebuyers" and the new $6,500.00 tax credit for "Non-First Time Homebuyers" we should have a busy holiday season.

Couple of changes on the horizon to be discussed. First of all, FHA appraisals will come under the Home Value Code of Conduct (HVCC) as of Jan. 1, 2010. This will cause some of the same appraisal issues we see on the conforming side. Not sure what we can do about it just make sure you price your sells correctly. This would mean all appraisals ordered will be ordered through a third party and no one can pick a local or preferred appraiser. Sounds like a good idea until you have a Destin appraiser do an appraisal for a property in Century. Then you will see why we do not like the HVCC regulations.

The second area you need to be aware of is FHA financing and the possibility of more cash needed to close. There is a strong argument at HUD to limit FHA to 95% financing. We opened the year with FHA financing 97.75% and finished this year at 96.5%. Another drop to 95% will mean less people qualify and more money needed for closing. We do not have this change in stone yet nor do we have projected dates but I would look for this change around Spring of 2010 unless the market picks up some steam and delinquency drops on mortgages.

I do not want to be negative in this blog but feel we need to know what is coming so if we have customers on the fence we can let them know. Now is the time to react and make that extra push for the close of 2009 and start of 2010.

With the news out today that we had a 3.6% drop in new home sales for September I find myself asking, how? Interest rates are still at all time lows hovering just below 5%. Home prices are lower than they have been in years. It seems like we should be in a housing boom except for one number we keep hearing about. That is the 9.8% unemployment number. More people can buy today than when this mess started. Yes, our mortgage guidelines have restricted somewhat but with the lower rates and prices more people qualify today based on the lower payments. They are just scared to buy thinking they may be unemployed soon. So how do we handle this and get more sales?

That is a question real estate agents and brokers must answer but when asked in the mortgage process we generally deal with it talking numbers. First time home buyers have had plenty of marketing dollars spent on them already and if they have not moved they may not. Even with the possibility of the tax credit going away. The group of people not marketed too and ignored in the current environment is second time home buyers. They currently own a home and still concerned about employment numbers but often still have equity in their home and growing their family.

Most of the second time home buyers we see either have cash or with the sale of the current home will have cash to put down on the newer, larger home. In this case we are still advising them to keep the cash in their pockets for a "rainy day" and buy the new home with as little money out of pocket as possible. I currently have one loan closing on a Rural Development Loan at 102% loan to value with no money down. The loan is easy enough but the real different part of this deal is he owns his current $185K home free and clear and is selling it soon. He plans on holding and investing that cash. He has no worries about loosing his job and is excited about closing. Your typical customers may not be in his group but 5%, 10% or 20% down may not be in all customers best interest today if they are worried about the possibility of loosing their job.

I always believe that in a market where you see who is being marketed too heavily look at those who are ignored and create a niche for yourself in that market.

Where is the market going? Well, it has been a roller coaster lately. Rates go up and rates go down. I never thought I would quote a 30 year fixed rate below 5% in my life again but that was proven wrong this morning. With low rates and the exit if the $8,000.00 tax credit in November business is picking up.

First time home buyers are starting to loose the fright about buying and thinking about the $8,000.00 as their last chance at free money. What ever the reason is more and more realtors are showing houses. There seems to be the one common factor in this economy and that is lack of cash. Many have had job layoffs or cut back hours and have depleted their savings. Though they may be stable in employment today and well qualified for a mortgage they do not have that nest egg for closing expenses.

This can be a deal killer or an opportunity depending on how you approach the sale. I know sellers margins are tight but a seller willing to pay closing cost is a house about to sale. All government loans allow seller paid closing cost and are very liberal on the amount. FHA will allow 6% with VA and USDA (Rural Development) not having any maximums on seller paid closing cost. Though you may not need 6% on all loans we have many closing where the buyer brings nothing but a copy of their drivers license to closing. I am working with several realtors now where we look at the net to the seller and work the purchase contract from there to make a sale where they usually fall out in negotiation.

Give us a call if you have that deal that is close but the numbers are just off a little. We have very creative ways of making these deals close and everyone walks away happy.

On another front I want to send out an invitation out for this years Family Expo presented by Baptist Hospital. Come out September 19th to the Pensacola Fair Grounds for free health screenings, Live entertainment, activities for the children and stop by the America's Mortgage Experts booth. Flyer is attached to this blog and all is FREE!!!!!

FamilyExpoColor2009.pdf <<<Click for Information

I sit in my office daily and hear how a realtor had a potential customer to buy that home they were trying to move yet the credit score of the buyer was not up to minimum standards set by their preferred lending company. Most all banks and mortgage companies have a minimum score requirement and I have heard 620, 660, 680 and even 700 is the lowest score they will take. In this market that may be viewed as responsible lending yet how many customers do we see that have good credit but not the credit score to match? This happens when the customers have a "lite" (not many tradelines) credit file or a couple of past delinquent debts and no active tradeline to bring the score back up. My Blog for today is to explain these customers still have a chance of acquiring a good mortgage. FHA, VA and U.S.D.A (Rural Development) do not have minimum credit scores at all. Problem here is, they do not make the loans themselves they just insure or guarantee them. The banks and mortgage lenders make the loans and thus make their own requirements for self protection.

Now before I tell you that we will close these loans with below a 620 credit score, let me discuss the "nay sayers". It is very true that closing 100% loans for people with bad credit got us into this mess to begin with, so with that said let us look at an example. I met with a elderly customer this week who had 4 items on his credit file. An old mortgage, a car loan and a credit card all paid off with a perfect rating. This gentleman had some medical issues in 2007 and through an extended stay in the hospital ended up with a medical collection in his credit profile. The collection was placed there before he was released from the hospital from a contractor of the hospital. Basically he had no chance of paying it before he left and his Tri Care insurance did not pay the bills until they were totaled when he was released. The insurance company paid the debt but the customer was left with a 602 credit score. three local banks and credit unions told him "no" and he almost gave up. Thankfully, he did not and the listing realtor had him call me with the permission of his agent. We approved him for the loan.

Credit score is not always a clear picture of a persons worthiness to get a loan. We can close these credit score short deals but you need to know they are not the irresponsible lending practices of the past. They are just a real look into the individuals credit report without paying attention to the score aspect. Here are some rules that may help a customer with a low credit score know if they can qualify.

The general rules are good credit in the past twelve months, no lates after any previous bankruptcy (two years), no lates after any previous foreclosures (three years). You must also have good reestablished credit after bankruptcy or foreclosure. All collections, liens or charge off accounts must be paid. I know that is a lot and may be a little confusing but any customer meeting these simple rules should be able to get a mortgage up to 100%.

I hope this may help clarify some misunderstanding and allow you to help us close more loans. Please call if I can further explain or help with any of your needs.

I was reading our local Pensacola "liberal" News Journal today and found out our home sales are up. It is about time the media prints some good news about the real estate market. This should be good news to all consumers who have been on the fence thinking about a new home. The question is with all the tightening in the mortgage market how do we get these folks to qualify for a mortgage? The answer may be as simple as having them complete an application.

For those of you who do not know already, banks and mortgage companies have limited the credit score minimums to 620 or more. I heard from a local credit union recently their minimum credit score for all real estate loans is 700. That makes qualifying for a mortgage very difficult for the lower and middle income earners.

We have a new and exciting FHA program for those people who have not met the minimum credit score requirements lately. The new program allows credit scores down to 530. Now I know most of you say "thats what got us into this mess" and in some respects you are correct. Let me explain, this program is not the rubber stamp approval of yesteryear but a hard look into the credit file and what circumstances caused the lower score. The simple way of looking at this is the credit score alone is not a reason in itself to deny a good home purchase. That is very good news as it will help us all move some of the inventory we have on the market.

I realize everyone has that loyal mortgage banker they use but for files that banker cannot approve you might want to consider America's Mortgage Experts and close that sale.

I hope everyone who reads my blog had a great Independence Day and is well rested after the fireworks. There are a lot of things happening and we need to take notice. First time homebuyers are still the driving force behind the new sales. It seems some of the public is taking notice of the $8,000.00 credit for anyone who has not owned a home in the past three years. Purchases need to take place before November 30th so time is running out. I still beleive the best advertisement we can do is making the consumer know about this tax credit. I can tell you most people I meet on the street do not know of the tax credit and that is missed opportunity for all of us.

Rates are holding steady in the low 5's and government loans are the normal closings. U.S.D.A. (Rural Development) and VA are still closing 100% loans and FHA's 3.5% downpayment is still very affordable. So get the news out and let us close some of these deals.

On another front the refinance market may strengthen soon. This may not seem very important to realtors but may I suggest those who can refinance will not walk away from an upside down property and further deflate the market. Fannie Mae has issued new guidelines for 125% LTV refinances. These loans will not allow cash out but will only service those people who are upside down and need to refinance due to an adjustable rate, balloon or just to lower their current rate. This new product is only hours old at this time and will not be available for some time but as soon as I get news of it I will share it with all. This may be the foundation our real estate market needs to truly turn around. Keep watching for updates.

June was a great month for me and I hope the trend will continue for July. Let us help you close more deals with happy customers.