Mortgage Rates Hit 5 Month Low - But don't get excited.

The government appears to think the economy and real estate market in general need a little more love. "Tapering" seems to be tabled for awhile as the Federal Reserve monitors the overall health of our country. Clearly they have it right. Mortgage rates spiked as earlier this year as the Fed decided it was time to pull the plug and we could, "all breath on our own". And just like clock work mortgage companies started layoffs as refinances slowed and purchase business couldn't keep up.

What is always true of mortgage lending is that when the government wants to slow down lending. They can immediately do so. Just like the "cooler" in Vegas. As soon as the CPFB, Fed, FNMA or some other government agency, quasi-sponsored group, or GSE decides the parties over... It's over and you better grab your red solo cup and get home to mommy.

The recent drop in rates was slight, and will help purchase business slightly but it will do little to really increase refinances. Although shockingly there is a huge portion of people who have yet to improve their rates and are sitting on 6% mortgages or higher.

But as Mom says, "people will always need money", and in reality rates are great right now. But that doesn't mean you go out and buy three more homes and leverage it all to be the next Trump. Or do you?
The economy is still shaky and many are hoarding cash and some even gold... Many are building bunkers and getting ready for the zombie apocalypse. And while I don't subscripe to the latter. In fact kill me first, I don't want to live through a Walking Dead in real life, the fact is many are unsure where we are headed.

But if you are looking to buy a home, buy it, you have to live somewhere and its cheaper than renting in many cases. If you are paying above 5% then refnance. If you can afford a higher mortgage payment then cut your term and lower from 30 years to 15 years.

Purchase 101 - Ten First Steps every home buyer should take.

When we are preparing to buy a house there is a plethora or things that need to be planned out and executed. 

OK, so you want to buy a house? Now what? Well the first question you should ask is, Can you afford a house? So here are 10 steps every home buyer should take. 

Step 1. Pull all your income documentation (2 Years Taxes Federal only, pay stubs, W-2's, 1099's, K-1, any 1120's or 1065's you may have) and plop it down in your home office, kitchen table or foot stool. Income for a mortgage loan is calculated by using gross income. Or your wages before taxes if you are a wage earners. If you are self employed, then we typically use tax returns to calculate your two year average earnings. We don't use Gross Income for this, but there are "add backs" to your income, or deductions we add back to your income calculation. That is why it is important to provide your mortgage professional with complete and accurate information at all times. Curious what an underwriter has to review? 

Step 2. At this point, you should be investigating who you will contact to start your application process with. You will then send all the items collected in Step 1. to that person by fax, email, overnight, or pigeon if you are so inclined. 

Step 3. Once your mortgage professional determines how much house you can afford you should begin your shopping. There are a million good sites both by Realtors and sites like www.Realtor.com and www.Zillow.com and search for houses in the price range you are looking for, in the neighborhoods and cities you'd like to live in. Your mortgage professional will give you and your Realtor (To be named later) a Pre-Approval, Pre-Qualification Letter or something similar to that. This letter will outline your approval amounts, terms, and your overall strength as a buyer. This letter will be shared with the Seller and Listing Agent when they consider your offer to purchase. There is never anything confidential on these letters. 

Step 4. Once you determine if there are homes in your price range, in the areas you want to be in, you should begin interviewing Realtors. Find someone knowledgeable about the home buying process and someone that really knows the home buying process. Like choosing a mortgage lender, choosing a Realtor, should always include a large consideration of experience. There is just no replacing real world experience. 

And let's not forget this is what may amount to the largest financial decision of your life. 

Step 5. OK, We've got a Realtor and a Lender. Now you are going to get even more professionals involved. From home inspectors, to title and escrow, to home warranty to hazard insurance. You are going to need A LOT of other people involved in this home buying process. This is where your lender and realtor can provide a bunch of help. If experienced, they will have referral partners for just about every product you need and their prices are going to be competitive. If you are trusting them with finding and financing your home. You will most likely be able to trust their referrals. But with everything - get on the internet and double check stuff. It can't hurt. Be educated about the things you know and Be educated on the things you don't. If there is ever ANYTHING that you don't understand... Call a time-out and make someone explain it to you. 

Step 6. You're Approved! So at this point, you are really only Pre-Approved. You've got a Realtor, You've got a Lender--- Well go find a house already!! 

Step 7. You've Found It!!  The house of your dreams. It's got everything.... Well you better believe that everyone else wants it then too! Time to get your offer in quick. Your Lender prepares a specific pre approval letter geared to the house you want and the offer price your Realtor will make. This is critical time. Do you offer high or lower than list?  Do you offer a higher down payment to look stronger? These are items your experienced Realtor will help guide you though. 

Step 8. The Offer. You did it! The offer is in. You went list, you feel good. Your Realtor is getting good feedback - and sure enough they accepted. You are in escrow. You've written your deposit check already. It better be from an account where the money was seasoned for a couple months. Now your lender will have  another list of items they will need from you. Remember Lending is paper intensive. The best way to deal with this amount of paper to BE ORGANIZED. Have a file. Have it organized. Gather and keep all documents together at all times. Take them to work with you. Remember a smart phone takes pictures. A great way to get pictures of drivers licenses and social security cards to your lender. 

Step 9. In Escrow = In Hell - Lean on your Realtor and Lender when you are in escrow. They will be a guiding beacon of light in a time that will feel very dark at times. There is always a lot of back and forth and few fees you will usually have to advance. Typically the escrow deposit, appraisal fee, home inspection fee, homeowners association certifications, then of course the remainder of your down payment and fees. Although you can usually covers all your closing costs with the price of the new mortgage - just ask a seasoned vet how to do that 

Step 10. Closing you are there. There is usually a lots of hustle around your closing date. There could be a rate lock set to expire, a credit report that will need to be run again. Always an updated pay stub and bank statement condition it seems....But if you stay on top of everything and respond to requests quickly, you should get your loan documents to the table in a timely manner. Make sure your drivers license or ID is updated and current for your notary and relax your hand for a lot of signatures. You'll feel like a rockstar by the time we are through. Once done your docs get sent to a bunch of different places (county recorder, lender funding department, title, etc.) and your loan is prepared to fund. Once funding occurs you are aren't the actual owned until "we record" a term basically noting the deed transferring title has been recorded with the county...At that point you are a homeowner. A good Realtor and Lender can help even after closing. You may have questions about payments, home owner repairs, moving, what have you. Chances are your professionals will have the answers to the questions you have. We've seen it all as experienced real estate and mortgage professionals.

And congratulations you now own a house! 

What we do. What we can do for you.

So I thought it wise to re-educate all my readers, past customers, and partners about all the products and services that California Property Resources offers today.

1. Residential Mortgage Financing - We offer EVERY mortgage product out there for a home loan. Owner Occupied, Investor, Vacation, Units, etc. All with amazing terms. I beat banks and direct lenders all day long. Moreover, I can offer non-traditional financing too! Subprime Lending is back and there are stated income alternatives for investors as well. We even have a "24 month bank statements as income program" program.

2. Commercial Lending - SBA 7a and 504 loan are amazing and offer 90-93% LTV financing for the purchase of primarily owner-user commercial buildings. SBA loan terms are very reasonable today and if you own a property, want to buy a property, or refinance a property, check in with me to see if we can improve your terms. We also offer Investor owned commercial property financing.

3. Asset Based Lending - We offer financing for Accounts Receivable. If your business is paid through invoices from another business, you may be able to sell those invoices and receive cash much faster. So if you in a cash flow pinch at the office, or need cash faster for a big expansion, this may be the prefect product for you. Quick easy and without all the bank hassle.

4. Contact Mortgage Processing - Simple Solutions is a division of our company that offers NMLS approved Contract Mortgage Processing to Mortgage Brokers and Bankers. This service allows Bankers and Brokers to avoid the hassle to interviewing, training, and managing full time employees. There is a significant cost benefit to the companies who use contract processing. And in today's rising interest rate environment, this may be just the trick to keep profit margins up.

5. Land Contracts - We are a licensed Real Estate Broker, but we don't offer traditional Real Estate Services. What we do offer is the creation, management and administration of Land Contracts or Contract for Deed transactions. If a buyer and seller can come to terms directly and avoid the Real Estate commission our service prepares contracts, deals points, and administers the payments through the life of contract.

Thanks for listening and please reach out if you or someone you know is in need of any of our products or services.

Rates are up, but they are still ridiculously low.

There is a saying that you can't catch a falling knife? Well I can catch a falling knife, but I think the point is that you can't time a low..in anything. low stock price, low car price, low home price, and low interest rates in general. And even if you could, how would you know that you got THE lowest rate? You wouldn't because there is always someone else who could shave a few bucks here and there. My point is this, the market is still very exciting and if you already refinanced to a rate under 4% you probably wouldn't need to refinance again. If you are buying rates are still amazing, and you shouldn't let the news telling you rates have spiked to hinder your decision.

Customers want to be lied to?

Back in my early days, one of my superiors shared this bit of advice about clients (business to business and business to customer. He was of the opinion that when all is said and done, that people want to be lied to. Not that they know they want to be lied to specifically, but that they don't know they want to be lied to.

I'll give you an example. Say a client calls me to shop a rate. The prospective client heard on the radio "fixed rates at 2.75%" and they call me and ask about a 30 year fixed rate which let's say at the time is at 3.5% and immediately, they are put on the defensive. Even if they don't tell me they've heard that rates are lower on the radio. The assumption is that the sales guy is selling me a higher rate. Now to be fair, that can happen. But I always quote lowest possible rates. And I am always very competitive.

Now back to the point. If the client tells me about the commercial he/she heard. I will of course, tell them that the commercial they heard was most likely offering a 10 or 15 year  fixed rate and the "fixed" portion of the commercial is the teaser. It's gets them to call the advertiser, or at least someone. Most of the time, the client gets that and can be convinced that what they heard was a commercial and I was being honest when quoting rates. However, there is a portion that doesn't believe me and will undoubtedly call the advertiser to check my story. Sometimes they call back and sometimes they don't.

That is the simplest explanation of the title of this blog article. But once we drill into real specifics it gets tougher to sway a customer away from a lie. A more specific instance would be a guideline variation.

A few weeks back, I received a call from a Realtor (my favorite we all need em' but few are worth dealing with). He noted that his client completed a short sale OVER two years ago and was looking at homes to buy and wanted to make an offer that weekend.

My first response, great let's go. Second response, Are you sure the short sale AND transfer of title of the previous property went through OVER two years ago. Of course, he said yes. Ok let's get the deal put together and I'll double check the transfer of the previous property.

By the end of the day I had established that the previous property was transferred just shy of two years prior. In fact, it was three weeks short. However, the guidelines state that credit can't be run until the two year window has elapsed. I of course, immediately called the Realtor and told him we'd need to wait another couple weeks....and of course he didn't like that answer.

So the Realtor calls another lender who tells him what he wants to hear..." Oh I can do that now" Send me the deal. One week later, he of course comes clean. But you know what? I didn't get the deal. The other lender who lied did?! What a slap in the face.

Here is a perfect example of a case where the client (Realtor) wanted to hear what he wanted to hear. Do I need to work with clients like this, no. But you'd think that being honest and forthright would win the deal every time. But people I am here to tell you that....Customers want to be lied to.

The worse scenario is when a client think you kept vital information from them when making a decision. Client closes a purchase loan with me and calls a few months later to talk about removing the mortgage insurance on the loan. Sure I say, values have risen, let's take a look. I start with ..."on the refinance... "Wait", he says. I need to do a refinance to remove the mortgage insurance. I say, yes on a FHA loan mortgage insurance stays on the loan for 5 years.

While the loan was in process we talk about every program available, every down payment option, and all mortgage insurance options. Now after everything is done forgetful memory makes me look like I was keeping valuable information from the buyer before closing. Do I expect a client to remember everything we spoke about, no. But don't assume that it is the sales persons fault or neglect when you can't get remember what conversation went down.

Was I better off saying, sure let's do it, and then stating the request was turned down, or do I simply state I am sorry you don't remember. Frankly, I think the telling them want they want to hear is better. But I went with option two and now can't a call back from the client.

Gotta' love it, but I think that the client does want to be lied to - they don't know it - but they do.

So if you want someone to tell you what you want to hear. Please do not call me.

Financial Products for Small Business

The economy is officially doing better. Not on fire, but many a businessman/woman I've talked with lately have noted that they've had their "best years ever". Now there is always a good amount of hyperbole in people's ranking of their own profits, but its true, times are better than the past few years.

One thing helping small businesses specifically, is the amount of financial tools available for the small, medium, and big business. Now I am not going to write about the big business financing out there. If you are a big time businessman you shouldn't be reading this blog. But for you small to mid-sized businesses there are some great products available to you.

Invoice Factoring  from companies like Merchant Bridge Finance are one way businesses are getting the expansion and operating capital they need to prosper today. So what the heck is invoice factoring. Well unless you are a finance major, you may not have heard of this tool. Basically, if you are a business that issues invoices to your customers (account debtor) then invoice factoring may be for you.

Let's say your client has a 90 day turn on their accounts payable and you have a chance for a job that will require more capital than you have available. You could tap a business line, if you have one. Or you can sell your invoices for cash today. A typical factor can provide an advance on that invoice of between 70-95% and will charge anywhere from 1-5% of the face value of that invoice. The terms vary widely between factor, industry and based on the strength of your client. Your credit and financial stability is important but not the over-ridding underwriting concern to be sure.

This product is great in industries like transportation, energy (oil & gas), textiles and apparel, temporary staffing and many others.

If you are interested in this service reach out to me and I will connect you with a factor who has a specialty in your industry.

Beware of the advice you get

Had a Realtor call me...Got a deal, its a RUSH.. Shocker there. I had it somewhere else, but they closed. I have a DU approval. It's a previous short sale...can we close in three weeks.

So the first thing that pops up is no one is really closing right now. And it's a short sale, right? So when was the previous short sale completed? "Over two years" Ok that is an exception right there for conforming and not all lender investors or brokers are even considering these. So I ask further..."When was title transferred from your clients on the old house?" I don't know..So I call the title plant and pull the old deed and sure enough they have three more weeks until it is even two years. In addition the DU approval even tells the client it needs to be two years.

So I say send me the deal and let me do the research, which fewer and fewer LO's are doing. Of course, the Realtor doesn't like that I've just basically said no to his new buyer. Even though I've really only said you need to wait three weeks and THEN we need to re-run credit and submit to an underwriter for a TBD decision.

But that isn't good enough, so he calls someone else who has been in the business 30 years as opposed to my 25 years, and he said no problem, send it over I can do it now.

Call two days later and sure as you know what, he can't do it now AND can't do it later because he has an overlay that requires four years after a short sale.

The moral of this story is, you can find anyone to tell you what you want to hear, but a true professional will tell you what you NEED to hear.

Side note, the Realtor is STILL showing the buyer homes knowing full well he had no approval and doesn't even know if the buyer can find financing. Oh yeah the buyer wants the best rate too... And people in hell want ice water.

Oh Relitters!

Mortgage Brokers offer better pricing and can offer reduce rates when the market adjusts in your favor at no cost.

So the CFPB now effectively regulate all things financial, including mortgage lending. And I can guarantee you the biggest firms with the biggest wallets will have the greatest influence on the rules and and regulations "promulgated" going forward.

tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates

1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce.

2. To put (a law) into effect by formal public announcement.

It just is how it is...But you as a consumer, Realtor, mortgage originator can share a big difference that really ends up being a very real and valid reason to use a mortgage broker instead of a mortgage lender, or bank.

It's called up-selling or steering - also knowing as bait and switch in some cases. The cold hard truth is we have all been told the mortgage broker primarily caused the financial collapse of 2008 (which really started in 2007) but it isn't true. Sure the broker did plenty of things wrong and many broke the law and did loans in a way only a graphic artist could admire, but they didn't create the guidelines (lenders, investment bankers, secondary departments) and they certainly didn't pay exorbitant fees to obtain those loans (investment banks, pension funds, fannie and freddie).

But a lender doesn't share beneficial swings in the market to consumers like a broker can. Example, you lock your rate with Bank of America, and three days later the market rallies, everyone buys treasuries and demand for mortgages (by institutions) increases thereby decreasing the cost and interest rates being offered. Bank of America will pocket the difference and not allow you to relock at the new market rate, with-out a hit. Whereas, a broker can simply re-trade that loan with another investor at a lower price, and share the savings with you the borrower.

Even worse, assume you don't even know the market had improved and you just take the rate you locked. If the bank sells that loan for even more, they don't share it with you. The banks and direct lenders can offer the better pricing but don't most of the time.

Even the rules allow for variable commissions and "generally prohibit the acts that should ALWAYS be prohibited. Read the CFPB rule below - in summary:

             "To prevent incentives to “up-charge” consumers on their loans, the final rule generally
prohibits loan originator compensation based upon the profitability of a transaction or a
pool of transactions. However, the final rule clarifies the application of this prohibition
to various kinds of retirement and profit-sharing plans. For example, mortgage-related
business profits can be used to make contributions to certain tax-advantaged retirement
plans, such as a 401(k) plan, and to make bonuses and contributions to other plans that
do not exceed ten percent of the individual loan originator’s total compensation."


So next time you think about choosing a broker versus a banker or bank, or direct lender. Make sure you understand a broker works for you to aid you in finding the best deal from multiple investors. The direct lender is only going to offer you their best pricing that day. AND they can mark up there prices without you even noticing since disclosure laws are easier for direct lenders.

Realtor's CAN do loans; Subprime is back; Real Estate is hot. Those are some good headlines.

Full credit to Rob Chrisman   So it is an age old question, much like, What is meaning of life? What is Stonehenge? Do bears %^** in the woods?  Can a Realtor originate loans. It would appear in this article that the answer is YES!! If.... Point of fact, I am a mortgage broker and not an approved FHA lender. So if you are thinking about originating loans, AND you are a Realtor Broker - I want to talk with you!! 

Sometimes I am asked, "Can I work for a lender as a loan officer and as a realtor for another company at the same time?" or, "Can a loan officer of a sponsored third party originator also be a real estate agent?" Fortunately there are some talented folks, and government agencies, that know the answers to these. Barbara Werth (Mortgage Training Today - barb@mttoday@co) wrote to HUD and writes, "I went to the reference listed in the second section, 4060.1 Chapter 2, page 6. I don't think you can do both (as a sponsored TPO - not an Eagle lender - or 'broker', carrying a real estate license and mortgage originator license even if a state supposedly allows it)."

HUD wrote to Ms. Werth, "FAQ: Can I work for a lender as a loan officer and as a realtor for another company at the same time? No, FHA does not permit "dual employment" on a full or part time basis in any mortgage lending, real estate, or related field. The restriction applies to all employees who are employed by a FHA approved lender that work on FHA loans. This also applies to a lender's "wholesale account representatives" that originate loans through sponsored third party originators (brokers). This includes working as a real estate agent or broker for another company. A loan officer may hold a vocational or professional license in real estate but may not engage in realtor activities or make use of the license while employed by a FHA approved lender."

HUD also wrote, "The following information is regarding if a mortgage broker can work as a real estate agent. FAQ: Can a loan officer of a sponsored third party originator also be a real estate agent? Yes, if the sponsored third party originator is not a FHA approved lender or an employee of a FHA approved lender. However, the loan originators of non-FHA approved entities must comply with applicable federal, state, and local requirements governing their FHA loan activities. If the sponsored third party originator is a FHA approved lender, it is subject to the staffing and employment requirements in Handbook 4060.1, Chapter 2. FHA does not prohibit loan originators of FHA approved lenders from maintaining a real estate broker or sales agent license, as long as the FHA approved lender has controls in place to ensure the individual does not make use of their license."

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In other news, Subprime is back. No not necessarily stated income, but yes Subprime loans for credit impaired clients are back in full force. Rates start at 7.95% for 7 year fixed 30 year fixed

AND BANK STATEMENTS can be used for income (Personal or Business). Down payments are big as you would expect, but leverage up to 75% LTV is available. 

I have multiple sources for owner occupied properties and non-owner occupied properties. 

************

In other not so shocking news, Real Estate is hot. Phoenix alone had 23% price appreciation YOY. 

California is following right behind that double digit YOY appreciation. So kids go buy some homes. If you income is good and stable, this is a great time to move up to that dream home. 

Financing is hard to find? Really? And FHA is STILL a great product.

Sometimes the press gets it right, and other times, you wonder where the heck they "heard that". When I watch www.CNBC.com lately, and I admit to being a news junkie, I've noticed they talk about financing being tough to get for homeowners and home buyers. So let's take a look at that theory.

First let's look at homeowners. So we have the HARP program, which allows borrowers who got a loan out prior to June 2009 AND whose loan is owned (this does not mean serviced - or who collects your payments) by Fannie Mae or Freddie Mac, to refinance with little to NO worry about the value versus the loan amount, or LTV (Loan to Value). They allow credit scores and you can even have a late mortgage payment over 30 days in the last year.

There is also the FHA Streamline program with allows current existing FHA borrowers to refinance at today's low rates in many cases with NO INCOME DOCUMENTATION and NO APPRAISAL requirement. Wow, that sounds like the old days.

And how about the home buyer? Surely, we lenders make it VERY hard for them to get a loan. Well you can put down next to nothing and buy a house today - even if your credit score if below 620. The FHA still offers home buyers options to buy with as little as 1% down. If you buy a HUD owned home as little as $100 down.

If you buy a home and you're a veteran...then you can get 100% financing.

If you buy a home in a rural area, USDA offers 100% financing on purchases as well.

And even if you just want a plain ole vanilla mortgage and have good to great credit, Fannie and Freddie will still offer purchase loans with as little as 3% down.

With all these options, its still amazing to me that some of my favorite news shows continue to talk about the lack of financing....I am here COME GET MONEY FROM ME!! I want to lend. 

FHA's are Assumable!

It's still a great time to buy IF you can get a house. Of course inventory concerns in better markets are a dilemma, let's look at some more positives of buying today with a FHA loan.

Guess what? FHA loans are assumable and why does that matter you ask? Well in 5-7 years, which is the typical amount of time for homeownership in one home, when you go to sell the home, you can sell with an assumable loan.

Well why does that makes sense? Well, if rates rise, as they are expected to do, and you are offering a 23 year fixed rate FHA loan that is assumable. Compare that to a new 30 year fixed mortgage at 5, 6, or 7%... The savings are massive to the new homebuyer.... and guess whose home those buyers may pick when looking to buy in an higher interest rate environment. So if you are in an FHA loan - here is another reason to feel great about getting that home.

New Real Estate Investor Mortgage Product

I am beginning to market a brand new mortgage program for private real estate investors that allows for quality long term fixed rate financing for their Residential Real Estate Portfolios.

This mortgage program is designed for Real Estate Investors who own, in aggregate, over $4 million dollars in investment property and can accomodate transactions up to $50 million is size.

This program allows these property owners to obtain one blanket loan, for up to 70% of the value of those stabilized and rented properties for refinance (cash out or rate and term) this program can also accomodate bulk acquisition of stabilized and rented properties in one transaction as well.

Program Terms:

Non-Recourse

ZERO Credit Score Requirements

50-70% LTV $4 Million-$50 Million Loan Amount

6-8% Fixed Term for 20 Years (4 Years Interest Only)

1.5% Total Points

Rate Term, Cash-Out, Bulk Acquisition

SFR, Condo, Units 1-4's

For more information - please call or email today. Mortgage Brokers are welcome to participate. Michael Foote michael@michaelfoote.com 949-584-4600 for details

Stocks Uncertainty Helping Rates

Hopefully investors will take a little off the top and force cash back into Treasuries which will help all of us Originators lock in lower rates for our clients. Little rally today is helping. A few more down days and we could retouch those lows of late last year and early 2013.

 

Financial turmoil in the tiny little island of Cyprus has investors shifting back into the safe haven trade of global Bond markets today feeling that it could lead other small Euro nations across the region.

US Stocks are trading lower on the news and giving a bounce to Mortgage Bonds this morning.

There are no economic reports due for release today.

The big standout this week will be the two-day Fed Meeting that begins tomorrow and ends with the monetary policy statement being released at 2:00pm ET on Wednesday.

There is no chance of a hike in interest rates but the Fed's rhetoric on the current stimulus programs will be closely scrutinized.

A Carefully Floating bias continues to be recommended, but as always, sentiment can quickly reverse.

HARP 3.0 or is it III - Bill introduced to Congress today

The new HARP 3.0 bill was introduced in Congress today. The goal of this program is to expand the already fantastic results of HARP 1.0 and HARP 2.0. The bills aims at making it easier for underwater homeowners whose loans ARE NOT owned by Fannie Mae and Freddie Mac to refinance. This program does not require mortgage insurance and has low market rates.

The new program aims to make it easier in regards to income, appraisal, and employement requirements. Basically, we are going back to stated for those that have shown they can continue to make payments on time.

I've personally spoken to many of you about this program and it's advantages. Now!! is the time to apply for this program...Yes I know its not even out yet. But I can tell you that if you wait until the program is announced finalised and launched you WILL BE too late.

Lender are notorious for raising rates to cut back production when prodcution soars. And believe me production will sore again when this product hits the market.. So to quote an old adage, The early bird gets the worm.

Call me or visit my website to begin the application process. We will get your application all set-up and ready to go once the program is live. www.michaelfoote.com

SBA 504 - For Small Business this is the best commercial real estate loan

SBA 504 financing offers businesses below-market, fixed rate financing for the acquisition, renovation or construction of commercial real estate. SBA 504 loans provide long-term stability for businesses with the ability to retain working capital which can be used to further grow the business and create new jobs. The March SBA 504 interest rate is 4.29%, fully fixed for 20 years.

The SBA has been offering small business financing for a long time. And many believe today that financing is tight. Well the fact is the SBA WANTS to lend to small business and the 504 program is a great way to buy a building rehab an existing building or finance working capital for expansion.

Many banks and small lenders offer the product but rates vary greatly depending on who you speak to. And lenders also have overlays, or further restrictions in addition the the SBA minimum qualifying requirements. This is where a smart broker comes in handy.

Since the qualification process consists of a TON of paperwork. For the busy business owner, simply pile your last three years of taxes, your YTD profit and loss, and an executive summary and send it to a competent broker. That broker will qualify your loan before a bank ever sees it.

At that point, the broker can determine whose guidelines you fit in most compared to the lowest rate and cost out there. A broker's job is to work for YOU and shop and secure the best financing - so you don't have to.

Rates and fees for commercial loans aren't that easy to come by. There isn't

HARP Loans. Refinance Underwater Properties

HARP loans set another record this years. Surpasing most expectations for volume but many are still missing out on getting a lower mortgage rate. The HARP program allows homeowners who are underwater on their 1st and 2nd second mortgages and whose loans are owned by Fannie Mae or Freddie Mac to refinance into a new first mortgage at todays low rates. They cannot payoff the second mortgage but the savings on the first mortgage usually provides substantial overall payment benefit. The savings can then be applied to paying down their second mortgages. 

At www.MichaelFoote.com you can find a source for HARP loans with-out LTV restrictions. What does that mean? Well in many cases HARP is not the same from lender to lender. Some banks limit the LTV to 105% or 120% when in reality the program does not have a LTV or HLTV cap.

Make sure to visit my site and reach out to see if you qualify for a HARP loan. In some cases you may even qualify for a conventional loan with an even lower rate. With values rising at an ever increasing pace, its not uncommon for homeowners to not realize how much their homes are worth today.

If you have an FHA loan, don't forget about the streamline mortgage program. It MANDATES you have to save money and doesnt require a income documentation or appraisal. Just make sure you've made your first six payments on your current loan on time...and chances are you qualify.

Mortgages, Mortgages, More.

There is no trick to getting a great mortgage. At www.michaelfoote.com you'll find a independent mortgage banker who takes pride in trying to get the best deal possible and any given moment. Can I predict moves in rates, no. No one can. But what I can promise is my profit margin is much lower that most lenders and brokers and I can prove it. Big banks can mark-up their rates and consumers really have no way of knowing what the "mark-up" is. You see mortgages are really no different that apples. Apples are shipped all over the world and depending on the cost to bring that apple to market and the margin the company selling said apple needs to charge over their cost is the price you are going to pay for that apple. Mortgages are no different.

Today the vast majority of mortgage peeps are selling the same product. Sure there are small differences in product (Macintosh, Red Delish, etc) but they are all still apples. I don't have a large marketing budget, I don't deliver donuts to Realtors and I don't "pay-to-play" with Realtors, and I work from home. All this allows my costs per funded loan to be lower that some of the larger lenders and even some larger mortgage brokers.

The real conclusion here is you need to work with those you trust. Your gut should tell you who to work with and if you don't trust your gut. Go with a personal referral and NEVER deal with someone that won't put their offers in writing and guarantee your lock terms.

Mortgage Rates Rebound

If you locked over the past week, you may have pulled the trigger too early. This morning we saw the 10 yr rebound nicely and that is starting to trickle down to mortgage rates. Today's best rate quote for a 30 year fixed rate conventional "vanilla loan" is 3.375% @ 3.419 APR. which is approaching a new low and will continue in this direction as the stock market retreats after approaching its all time highs again.

The moral of this story is don't always be in a rush to close, if your mortgage advisor isn't. A good mortgage professional will lock when he thinks it's a good time to lock, NOT just when it's just a good time to get paid.

If you have not checked in with a mortgage professional in the last 6 months its time to check in for a tune-up.

If you are still paying over 4% please check in with someone your trust and see if you can save some money - it can't hurt to ask and it's always free to get a quote.

FHA is pricing you out

FHA is losing money. They are in the red by billions. 10% of EVERY FHA is delinquent over 30 days. So it's no surprise that FHA has increased mortgage insurance premiums. They do this not just to cure deficiencies in the ole' P&L but to force private money to take it's place. But not all FHA borrowers should be in FHA loans. There are many loan origintors that run from conventional when the LTV reached 90%+. But not so fast. Many borrowers where loans are at 95-97% LTV on purchase transactions would be better suited if they took a look at conventional with MI. MI isn't that bad when compared to FHA. So when someone recommends FHA they better have a very good reason why conventional is not an option.

HARP 1.0? HARP 2.2? HARP 3.0? HARP Seals? HARPsicord?

National Mortgage News is running an article today noting that Two Senators have reintroduced a bill aimed at expanding HARP. HARP is of course the governments refinance program aimed at helping underwater homeowners who have a loan currently owned by Fannie Mae or Freddie Mac AND was closing prior to June 2009. Expansion of HARP could allow any loan currently owned by Fannie Mae or Freddie Mac to be refinanced regardless of closing date. And remember just becuase you send your payment to Bank of America or ANY other institution, it doesn't mean your loan isn't potentially owned by Fannie or Freddie.

There still appears to be no relief or recent commentary on Harp 3.0 which is rumored to be a similar product wherein FHA would refinance underwater homeowners regardless of Fannie Mae or Freddie Mac ownership of the first mortgage. This would obviously help a ton of borrowers in Jumbo, Option ARMS, Interest Only and Portfolio loans.

The bill (S. 249) is also designed to create more competition between lenders and servicers in refinancing Fannie Mae and Freddie Mac loans. This bill will help millions of borrowers with GSE loans to refinance at lower rates, according to the sponsors Sens. Barbara Boxer, D-Calif., and Robert Menendez, D-N.J.

“It is a win-win-win,” Boxer said. “Homeowners will have more money in their pockets, Fannie and Freddie will see fewer foreclosures, and the housing market and economy will continue building momentum.”

The Home Affordable Refinance Program was originally aimed at providing streamline refinancings of GSE loans with LTVs above 80% to 125%. The 125% cap was eliminated in early 2012. The Boxer-Menendez bill would expand HARP to include refinancings of all GSE loans, including loans with LTVs below 80%. “This bill prohibits the GSEs from charging upfront fees to refinance any loan they already guarantee, which is also in the best financial interests of the GSEs and taxpayers,” according to a summary of the bill.

To increase competition, the authors directed the GSEs to ensure lenders that refinance a GSE loan are subject to the same representations and warranties as the lender that services the loan. Currently, the new lender faces stricter rep-and-warranty liability than the lender that owns the servicing. The different standards pose a barrier to competition, “resulting in higher prices and less favorable terms for borrowers,” the summary says. The two senators introduced a similar HARP bill last year but it never reached the Senate floor for a vote.

New FHA MI Rates

Well it's clear FHA is broke... and if you want a new FHA loan it will cost a little more. And that's OK, FHA still offers some of the most leverage and is the most credit and high debt to income ratio forgiving set of guidelines out there. If your loan request is over 80% don't go straight to FHA check out MI rates at 90-97% LTV and you many be surprised. Here is the link to the FHA mortgagee letter.

http://portal.hud.gov/hudportal/documents/huddoc?id=13-04ml.pdf

Small Business Financing - Buy Your Building

Many small businesses continue to lease their buildings out of fear of the uncertainly. However there are several tax advantages to owning your building and financing has never been easier.

SBA Real Estate loans can offer as much as 90% LTV on the purchase of owner-user buildings. In fact you only need to occupy part of the building.

In many cases it is cheaper to own versus lease even on a monthly basis in addition to the tax advantages.

So if you are planning on buying your building or buying a moving your business to a new building check out www.michaelfoote.com for your SBA needs.

You can also use SBA loans to finance your operations with a refinance. If you don't ask, we can't help. Give me a call today.

Rate Pop-Up

Rates have changed recently, but before you freak out, let's look at a basic example.

Two weeks ago I was offering 3.375@ No points for your basic bare bones 30 year refinance. Today, I am offering 3.375% @ 1.5% points. The reality is both of those refinances rates and fee combos are great historically speaking. But if you are a serial refinancer, who always pays no points and no fees, you may want to do you final refinance and pay some fees.

If you refinance with points and fees the recapture period gets longer. That period is the amount of time in payments it takes you to realize those fees in the form of a payment reduction. But if you aren't planning on refinancing this debt again, paying some fees to get the lowest rate out there may make sense. For more information contact me through my website at www.michaelfoote.com .

Mortgage Rate Update for 2013

Today was a perfect example of the overall economic recovery impacting mortgage rates. The jobs report plus the stock market has been on fire with the S&P over 1500 today. And what does that do to rates? Here was the commentary from my office this A.M.
 

"Mortgage Bonds opened higher this morning but quickly reversed lower after Americans seeking jobless benefits fell to their lowest levels in five years.

The Dow and S&P 500 continue to move to multi-year highs causing investor dollars to shift from the Bond markets and into more riskier assets.

A locking bias is recommended in the short-term, which is days to two weeks, but in the longer term floating is prudent.

As always keep a close eye on the market for any changes.

MBS -22bps  (Mortgage Back Securities Worse by)

 

Finally a change I can believe in.

Finally!!!

"The Conference of State Bank Supervisors (CSBS) announced that a new National SAFE MLO Test with a uniform state component will be available on April 1, 2013. With the implementation of this new test, 24 state agencies will no longer require a second, state-specific test component to be taken by mortgage loan originators (MLOs) seeking licensure with their state agency. With the implementation of the new National SAFE MLO Test with a uniform state component, 20 state agencies - DE, GA, ID, IN, IA, KY, MD, MA, MI, NH, NC, ND, PA, SD, TX, UT, VA, WA, and WI - will no longer require a state-specific test component as of April 1, 2013. Additionally, four state agencies - Alaska, Kansas, Nebraska, and Vermont - will remove their requirement for a state-specific component on July 1, 2013. Remaining state agencies will continue to require state-specific test components, though additional states are eventually expected to adopt the new National SAFE MLO Test with a uniform state component. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) requires MLOs to pass the SAFE MLO test before they can be licensed with a state agency through NMLS. The test was comprised of two parts: a national component and a state component. In addition to passing the national component, MLOs seeking to hold licenses in multiple states were required to pass the state component for each state in which they wish to do business. Under the new National SAFE MLO Test with a uniform state component, a license applicant who passes the test will not need to take any additional state-specific tests to hold a license with 24 state agencies."

I can close loans in 3 days...???

Even if we could, and we can't, should be so focused on closing quick. Sure it makes sense for the mortgage company the quicker the close, the cheaper the cost in funding in theory. For purchase loans, there are always a targeted close date and in those cases borrowers and mortgage companies need to act quickly to provide a timely closing for all parties.

But for a refinance, the push to close is usually from the Loan Officer and his company.
But why rush? You certainly need to be prompt but sometimes delaying a closing a few weeks could be VERY beneficial in obtaining a lower rate. Typically, rates go up and down in a range during any given short time frame of a few weeks. The trick to getting the best possible rates and costs is being patient and working with you loan officer to target and be ready to take advantage of small improvement of rates. So 30 days sound great, but is you could save hundreds more by waiting a few weeks, isn't that better? 

Adjustable Rates? When to get Fixed?

 

 

Here is the all time 10 Yr Chart. I show you this for one reason. Please look at the BIG hump in the middle and the humps to the right and left of the chart. OK. Pretty clear, rates can go up and down. You can also see they can go up several points per year in some cases. Now no one has a crystal ball, but when you factor in the facts (get it)... that we are in the indisputable all time low for mortgage rates over the past 50 years and we've seemingly bottomed in Real Estate in most metro markets...The question remains at what point do rates rise? Warren Buffet will tell you no one can predict a bottom of anything. But IF you are staying in your home, or don't plan on selling a property for an extended period of time, refinancing short term or adjustable rate mortgage debt to fixed debt takes the insecurity and unpredictability of rising rates out of the equation. Any the economy improves, corporate earnings continue to rise, unemployment drops, and the government slowly lowers its mortgage purchases, I'm betting we get a big rise in rates, and if you haven't purchase or refinanced by then, you will see your your borrowing costs and benefits go down markedly.   



2013 Mortgage Thoughts

So as we all are back at "it" after the holidays now, I thought it an appropriate time to take a look at the mortgage market for 2013. Or at least how it see the year.

As the year wound down last month. It appeared the 2013 year would be a banner year for originations with government programs and ultra low rates spurring more home sales and continued refinancing activity. And I think that is still holding true with an additional few items that could tweak the outlook.

Most notabley, the Fed recently released commentary that some of the governors would like to see fed mortgage purchase volume slow down in the middle to year-end 2013. The 10 yr promptly shot up and mortgage rates spiked. However the move was muted due to the mortgage market absorbing some of the increased pricing by lowering margins. What this does tell us is that rates can move fast and as the government exits, the private party will need to become more involved.

The real issue is that if the private market has to return to the mortgage securities market, they will need higher yields undoutedly, and some clarity with mortgage rules and regulations. All of which seem to be very fluid issues with no clear resolution. The government still participates in 93-97% of residential mortgage originations. So it is clear if they exit, who will pick up the slack, or does mortgage volume plument, driving up costs and rates dramtically. It sounds dire but please take it from a seasoned veteran, rates can very easily rise to several points in a year.

My motto today, is a bird in the hand.  If you got em' lock em'. Which means of course, if you can see benefit from refinancing do it now, before its too late. No one can time a bottom.

If you see value in purchasing a new home, or an investment home. Do it. Rates and programs are very aggressive, and you may never see rates this low again.