Today I read the news that we will get new rules from FANNIE related to underwriting guidelines. Rob Chrisman wrote, "The new DO/DU version will enforce underwriting changes that will allow buyers to use gifts and grants from nonprofit groups for their minimum 5% down payment. Currently, borrowers had to contribute a minimum 5% down payment from their own funds, but additional down payment money could be from a gift (though never from a home seller). The exception was for borrowers who put 20% down: all that money could come as a gift. But with overlays, many lenders now require a down payment of 10% or more, the new rules mean that borrowers will still have to come up with extra funds - either their own or gifts. But with Version 8.2 comes tougher DTI ratios: the maximum ratio for those seeking a conventional mortgage will drop to 45 percent from 55 percent under the new guidelines. Buyers who have missed a payment will have 5% of the total balance added to their ratios. And borrowers who have gone through foreclosure will be excluded from obtaining a Fannie-backed loan for seven years, up from four."
Wow, sure is going to see who will be able to buy these foreclosures. My bet the rich will get richer.
Tuesday, November 23, 2010
Tuesday, November 16, 2010
Wednesday, November 10, 2010
Rates..Always good to take stock of where we've been and where we are today.
I always track rates. I live for rates. Daily morning rates, mid-day price improvement, late market deterioration. It's as close as I will get to being a wall street trader ala my favorite hotel thrasher Charlie Sheen, which is just fine with this California boy.
When someone asks me what the rates are and I tell them. I will many times get back, "That's too high, and so and so is offering -0.009% with no fees at all. In fact, the lender said I would get a vacation to Hawaii, and a new car!!" Obviously the later is a shot at levity. But the point being is that many people say many things, and sometimes they are actually speaking the truth or at least comparing apples to apples. Sadly I'd say the majority of mortgage quotes given on websites are half truths at best and many times just plain wrong.
Go to bankrate.com and see the average lowest possible rates - then call the person you know or trust, whether they are a broker, lender, DRE, DOC, CRLMA, NMLS, NORML (the later again a shot at levity), and complete the loan process with them.
Until you complete the application process, and I mean ALL the loan application fields filled out, all income doc, all assets information. Yes, I want all the pages of the bank statements. No, I don't care you get massages at Madam Wong's in the city. Tell your mortgage professional what you want. If we can get it, we'll give it to you. Then and ONLY then, will you know what your loan terms will end up looking like.
But look at this chart - and marvel at your timing...Money is as close to free than it's ever been; whether you believe that is a good thing or not rates are dirt cheap.
When someone asks me what the rates are and I tell them. I will many times get back, "That's too high, and so and so is offering -0.009% with no fees at all. In fact, the lender said I would get a vacation to Hawaii, and a new car!!" Obviously the later is a shot at levity. But the point being is that many people say many things, and sometimes they are actually speaking the truth or at least comparing apples to apples. Sadly I'd say the majority of mortgage quotes given on websites are half truths at best and many times just plain wrong.
Go to bankrate.com and see the average lowest possible rates - then call the person you know or trust, whether they are a broker, lender, DRE, DOC, CRLMA, NMLS, NORML (the later again a shot at levity), and complete the loan process with them.
Until you complete the application process, and I mean ALL the loan application fields filled out, all income doc, all assets information. Yes, I want all the pages of the bank statements. No, I don't care you get massages at Madam Wong's in the city. Tell your mortgage professional what you want. If we can get it, we'll give it to you. Then and ONLY then, will you know what your loan terms will end up looking like.
But look at this chart - and marvel at your timing...Money is as close to free than it's ever been; whether you believe that is a good thing or not rates are dirt cheap.
Tuesday, November 2, 2010
Top Ten Mistakes Realtors Make in Today's Mortgage Market
Top Ten Mistakes Realtors Make in Today’s Market
Today more than ever Realtors play an even more critical role in determining financing options for their clients. Even though many Realtors are not familiar with the intricacies of today’s lending environment. Sure, they know it’s tougher, but do they know how to help? Here is a top ten list that Realtors can use to aid in the mortgage process for your clients.
#10 – Don’t even look at one property prior to receiving a pre-approval from a competent lender or mortgage broker. There once was a time when pre-approvals were silly because EVERYONE got approved. But now you need to review every piece of borrower income and asset documentation with a fine tooth comb to make sure there are no landmines within those documents and others that could potentially kill your transaction.
#9 – Condo’s are tough. Before you show a client a condo, make sure it is an FHA approved condo or has the ability to be financed for FHA. If your client is not an FHA buyer, then you should certainly make sure the condo project is lendable. Is there any litigation currently pending? Is there enough reserves? Is there a special monthly assessment that could affect borrower qualification and debt to income ratios?
#8 – Ask the borrower to immediately start gathering their financial documents. As noted in #10, borrowers need to complete this process prior to looking for a home. As a Realtor you should make sure you aren’t wasting time showing buyers properties that cannot afford.
#7 – Participate in the pre-approval process. Sure many of you just want to see the baby and you don’t want to hear about the labor pains. But seriously, the more involved you are in the financing side, the easier it will be for you on the real estate side. Plus you relay to your clients your expertise in finance as well as real estate.
#6 – Determine the long term goals for your client with this property. The sooner they start thinking about investments, exit plans, or how long they plan to hold and sell, or turn a primary residence into a rental property, the easier our job will be to find a suitable mortgage that fits the borrowers plans.
#5 – Get a pre-approval letter that can be easily modified. If your lender has prequalified a buyer to $500,000 but you are making an offer at 450,000. You certainly don’t want to tell the listing side you have more room. Get a WORD document and change the purchase price lower. This is a great tool when you are working up an offer at midnight and your loan officer has decided to finally get some rest.
#4 – Understanding closing times is critical for Realtors when determining how to present an offer. If you are making an offer for an REO property and the REO property manager wants a 15 day escrow and you have an FHA buyer then you need to know that won’t happen. Financed buyers are up against cash buyers all day, and for some sellers, a cash deal at a lower offer price is more desirable.
#3 – Work with your lender. Calling your lender and screaming at them to, “Close this deal now!!” This does nothing to help close the deal. The Loan Officer much like you has to close loans to get paid just like you. So next time, when you approach the lender, ask first is there anything I can do to help, and then if you get no response, yell and scream.
#1 – Work with Michael A. Foote, CMB. With over twenty years of finance experience you need a professional is today’s fast paced and ever changing market.
Today more than ever Realtors play an even more critical role in determining financing options for their clients. Even though many Realtors are not familiar with the intricacies of today’s lending environment. Sure, they know it’s tougher, but do they know how to help? Here is a top ten list that Realtors can use to aid in the mortgage process for your clients.
#10 – Don’t even look at one property prior to receiving a pre-approval from a competent lender or mortgage broker. There once was a time when pre-approvals were silly because EVERYONE got approved. But now you need to review every piece of borrower income and asset documentation with a fine tooth comb to make sure there are no landmines within those documents and others that could potentially kill your transaction.
#9 – Condo’s are tough. Before you show a client a condo, make sure it is an FHA approved condo or has the ability to be financed for FHA. If your client is not an FHA buyer, then you should certainly make sure the condo project is lendable. Is there any litigation currently pending? Is there enough reserves? Is there a special monthly assessment that could affect borrower qualification and debt to income ratios?
#8 – Ask the borrower to immediately start gathering their financial documents. As noted in #10, borrowers need to complete this process prior to looking for a home. As a Realtor you should make sure you aren’t wasting time showing buyers properties that cannot afford.
#7 – Participate in the pre-approval process. Sure many of you just want to see the baby and you don’t want to hear about the labor pains. But seriously, the more involved you are in the financing side, the easier it will be for you on the real estate side. Plus you relay to your clients your expertise in finance as well as real estate.
#6 – Determine the long term goals for your client with this property. The sooner they start thinking about investments, exit plans, or how long they plan to hold and sell, or turn a primary residence into a rental property, the easier our job will be to find a suitable mortgage that fits the borrowers plans.
#5 – Get a pre-approval letter that can be easily modified. If your lender has prequalified a buyer to $500,000 but you are making an offer at 450,000. You certainly don’t want to tell the listing side you have more room. Get a WORD document and change the purchase price lower. This is a great tool when you are working up an offer at midnight and your loan officer has decided to finally get some rest.
#4 – Understanding closing times is critical for Realtors when determining how to present an offer. If you are making an offer for an REO property and the REO property manager wants a 15 day escrow and you have an FHA buyer then you need to know that won’t happen. Financed buyers are up against cash buyers all day, and for some sellers, a cash deal at a lower offer price is more desirable.
#3 – Work with your lender. Calling your lender and screaming at them to, “Close this deal now!!” This does nothing to help close the deal. The Loan Officer much like you has to close loans to get paid just like you. So next time, when you approach the lender, ask first is there anything I can do to help, and then if you get no response, yell and scream.
#1 – Work with Michael A. Foote, CMB. With over twenty years of finance experience you need a professional is today’s fast paced and ever changing market.
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