New - Down payment assistance in Arizona!

In addition to the Down Payment Assistance program that’s available for the Greater Phoenix area (Maricopa County), there is a new program available!


The Home Plus program, administered by Arizona Housing Finance Athority, provides 4% of the mortgage amount to be used for down payment and/or closing costs in most other Arizona counties.

A few of the highlights:

4% of loan amount is a GRANT – NON-Repayable !!

Up to $315,569 purchase price in Pinal County (call me for other counties)

Grant is available for Primary Home only

FHA, VA, or USDA financing regulations apply

Minimum 640 credit score

This is a great program. Visit the Arizona Housing Finance Athority web site for details on a tax benefits.

Only approved lenders can offer you this opportunity. Call me for additional details or to apply.

Subprime Again ?

Would a return to subprime mortgages be good or bad for the real estate market?

There are so many different ways to look at it that I’m not exactly sure what I think.

On one hand, I do believe that the subprime mortgage debacle played a huge role in the implosion of our housing market. But what was it that drove the machine in the first place? Was it lender greed? Borrower ignorance? Crowd mentality? Inflated appraisals? Over enthusiastic Realtors? Buyer desperation? Keeping up with the Joneses? Bad timing? “Big bank” duplicity? General apathy? I would tend to go with All of the Above. And who benefitted? We all did. There are millions of thankful homeowners who wouldn’t be homeowners at all if it weren’t for the leg-up they received from their first (subprime) mortgage.

On the other hand, I keep having this nagging feeling that if everything negative in our economy hadn’t come together just as it had, in precisely the right way and at precisely the right moment, the real estate crash mightn’t have been so severe (would it even have happened?). There’s such a muddle of cause and effect in this whole snarl of events that it’s become a “chicken or egg” debate. No one is really certain what came first and what caused what.

I watched the movie Too Big to Fail again last week. It’s an eye-opening little piece of cinema for sure! All about manipulation… ultra-powerful people in various stages of delusion, seducing and misleading the general public. I felt gullible and exploited. But then maybe it’s just a movie. Maybe.

As much as I’ve mulled over our economic maladies in the past 5 or 6 years, I am no closer to understanding them. That’s frightening to me. Does anyone understand, and are we doomed to repeat this?

This all incites me to share a very brief article I read today, courtesy of Housingwire.com. You can read it here. Apparently someone is suggesting we return to some version of the subprime mortgage.

Knowing what I know, which as you can see is very little. And feeling what I feel (very much conflicted). I’m right back where I was before I read that article. I have no idea what I think.

What I know…

1.)    People need a place to live.

2.)    People deserve a second chance.

What I feel…

1.)    This might help our housing market and in the process, our economy.

2.)    We still don’t know what started this whole thing.

Survey: Rising Prices Motivate Buyers to Purchase Now

Thanks to DSNews for this informative article.

Make Yourself at Home - Navigating the Mortgage Process, Part 3

I suppose this might have been the first installment in the “Negotiating the Mortgage Process” series but after giving it some thought I determined that having a point of reference for these terms would make them more understandable. Besides, it promises (though I’m not sure if it’s a promise or a threat) to be the longest post in the series, hence, last.

Let me start with what I feel is the most misunderstood term in the entire mortgage industry: APR. Nine times out of ten there is a startled expression and a “but I thought you said…” when one reaches the disclosure revealing the APR. The most important thing to know about APR is this is not your interest rate.⇔Read that again.

APR – Annual Percentage Rate is an aggregate of all charges related to your loan, including, but not limited to: interest rate, insurance, title fees, HOA transfer fees, appraisals and re-appraisals for needed repairs, closing costs. Please be aware that even after you have locked your interest rate, the APR can change due to the adjustment of any associated fee.

Interest Rate – Your interest rate is solely, the percentage charged for use of the principal loan amount, and includes no other charges.

Lock – The guarantee of a specific interest rate for a specific amount of time. After it is locked, your interest rate will not rise provided the loan is closed on or before the pre-determined expiration date. This date is often very close to the closing date on your contract. Together you and your loan officer will determine the best time to lock your rate.

Pre-Qualification & Pre-Approval – Though very similar, there is a difference. When you request to be Pre-Qualified, the lender collects all of the information necessary, checks your credit, and determines how much you are qualified to borrow. A Pre-Approval may include running your information through an automated underwriting system, or placing your file before an actual Underwriter, so they are able to commit to the loan prior to the borrower identifying a property.

Ratios – or debt-to-income ratios: The rate/relationship of your monthly income compared to your monthly housing expense comprises the Front-end or Top ratio. The Back-end or Bottom ratio is determined by weighing your total monthly living expenses (cars, credit card payment, school loans, etc) against your total monthly income. Lenders use these numbers to determine a borrower’s ability to repay the mortgage.

Mortgage Insurance – Insurance protecting the lender against loss in the event that a borrower defaults on the loan. Generally required for loans greater than 80% of the purchase price of the property. A fairly common misconception about mortgage insurance is that it is voluntary, it is not. Where mortgage insurance is indicated, it is required. MI is paid in two parts, an upfront percentage of the loan generally rolled into the mortgage amount, and a monthly payment incorporated into your mortgage payment. After reaching a loan to value of less than 80% you may request to have mortgage insurance removed.

Appraisal – Written analysis of the estimated value of a property, by a qualified, certified appraiser. The appraiser must be an independent 3^rd party and is not beholden to the lender, the seller, the buyer, or any of their agents. Though subjective, the appraisal is meant to, and generally does, present an accurate accounting of the current market value of a property. It takes into consideration, most heavily, currently sold comparables (similar properties), and to a much lesser extent pending and current listings. Relatively standard adjustments are made for differences in the comparable properties.

Credit Inquiries – You will be asked to explain inquiries that appear on your credit report. These are identified by a date and company name, and are an occasion when your credit was checked by the company stated. This could be a random check by a credit card company that you already deal with, an occasion when you may have requested additional credit to buy a car for instance, or open a new store charge card.

Processing – The scrutiny of all documents you have provided to your lender. A Processor will verify your employment and income, substantiate account balances and availability of funds to close, review contract terms and deadlines, and generally provide an overview of the file for the Underwriter.

Underwriting – This is the final analysis of the complete file. Nothing can be missing from the file at the point of final underwriting approval. Your file must meet certain government laws and industry regulations and this is where that determination is made. Underwriting issues the initial approval, conditional on any incomplete documentation. Final approval is extended when all conditions are submitted back to Underwriting.

Conditions – Additional terms that must be met in order to complete your loan package. Some initial approvals involve conditions for the borrower, some do not. When all conditions are met your file will be cleared to close and documents will be sent to the title company.

Thanks for visiting, hope to see you next time. And as always, if you have any questions just give me a call. Until next time,

Tom

Time Flies ...Navigating the Mortgage Process, Part 2

At the outset it might seem like 30 days is an eternity.  This is the customary time period for a real estate purchase to close. But there’s a lot for you and your mortgage company to accomplish from the day you sign your purchase contract until the day we fund your loan. Believe me, the time will just fly! Your real estate agent is far more qualified to explain what needs to be done in regards to the property you are purchasing . I’ll leave that to them. But the evolution of a mortgage is often a mystery to both agents and clients. I hope to clear that up.
 

The blueprint for the mortgage process rarely varies. Don’t get me wrong, it is possible to accomplish this in a shorter length of time but that usually depends in large part, on the efficiency of the borrower and the availability of their documentation. Below is an average timeline:

Day 1   Executed Purchase Contract delivered to Lender

Day 2-3    Loan Application signed. Buyer gathers required documentation (see previous post)

Day 7    Appraisal ordered, providing all home inspections have been completed *

Day 7-14    Processor verifies applicant information, property information, contract terms

Day 14    Appraisal complete and delivered to borrower

Day 17    Loan submitted to Underwriting

Day 20    Underwriting initial approval. Pending conditions identified

Day 22    Submit all documentation to satisfy underwriting conditions

Day 24    Loan cleared to close. Documents ordered for delivery to Title Company

Day 25-26    Documents prepared by Title Company and ready for buyer’s signature

Day 26-30    Signed documents returned by title to mortgage company. Ready to fund and record. Homeowner get’s their keys!
  

*  Unless otherwise advised by your agent, we usually suggest that you perform all property inspections before your appraisal is ordered. This way if the condition of the property does not meet your approval, you have not needlessly paid for the appraisal.

 

*  Generally the appraisal is due one week from the day it is ordered.

A word about rate locks. At any point after your loan application is signed, you and your loan officer will determine the right time to lock your rate. This is a cooperative decision and it is imperitive that you are given enough information to make this choice.

 

The above is relative to a typical transaction. Occasionally there is a stumbling block or two but we’ve gotten really good at overcoming obstacles, and rarely is there one that baffles us. Short sales are a completely different story so ask your agent how they work. After you have short sale approval the transaction proceeds as above.

 

 

 

 

 

Into the Wild... Navigating the Mortgage Process, Part 1

Let me point out right off the bat that it doesn't need to be complicated or stressful. As a matter of fact, we go out of our way here to make the entire transaction as painless as possible. Our motto is ...simple as that ® and I truly believe that says it all. But I've seen this time and time again. Borrowers, both new and experienced, give me "the look". You know the look. The one that says... Really??, you REALLY need me to get you THAT? Let me assure you that we never ask for anything we don't need. And one other thing, we never ask for anything we don't need.

Whether you're applying for your first mortgage or your 10th, if you haven't been through the system in the last 4 or 5 years, your view of the process is blurry at best. Government and industry regulations have morphed mortgage transactions into a completely different animal. One that is unrecognizable to even seasoned home buyers. So here's a quick rundown of current procedure. I hope this is helpful, but either way I'd really appreciate your feedback. And feel free to let me know if you feel that I've left something out.

 

I can't cover every eventuality, there are many types of mortgages each with their own requirements. But these are the basics. You'll need:

 

• Tax Returns
• W2s and/or 1099s
• Pay Stubs
• Bank Statements, with an explanation for any unidentified large deposits (by government regulation)
• Copy of your Driver's License and/or Social Security Card
• Letter of explanation for inquiries on your credit report
  
  
• Name and contact information for the company you will be using to insure your home

Incidentally, if you bring the above documents with you when you sign your mortgage application it's likely that your transaction could close much quicker.

Don't be surprised if you are also asked for:

 
• Letter of explanation for the disposition of your current home
• Letter of explanation for any derogatory items or AKAs on your credit report
• Current mortgage statement, insurance and HOA statements, if you own a home
• Copies of leases if you own investment property
• Disbursement letters that demonstrate the continuance of disability or retirement income
• Gift Letter and paper trail of funds if you are receiving gift money
• Name and number of your landlord if you are currently renting

I've never done a blog series in the past, but there is so much information that I've been asked to cover, that it's simply not practical to put it in one post. Next time I'll provide you with the 30-day mortgage timeline, typical for real estate transactions. And the 3rd installment will include definitions of some misunderstood mortgage terms.

Thanks for visiting, hope to see you next time. And as always, if you have any questions just give me a call. Until next time,

                                                                                 Tom

Changes in HARP & HAFA are the HOT topic !!

It seems like a relatively small thing, but it would appear that everyone is talking about recent adjustments to the HARP & HAFA programs, and I mean everyone. The subject has caught on with the American public and they’re not letting it go! An obvious explanation would be concern over hundreds of thousands of upsidedown mortgages and their residual effect on almost everyone else’s home values. But I think it goes much deeper than that.

For those of you who have been living in a cave for the past 2 ½ years, HARP AND HAFA, are part of the current administration’s Making Home Affordable program, which was implemented in February of 2009. The premise is to provide homeowners with alternatives to foreclosure through refinance, short sale or deed-in-lieu. Until now this program has received less than stellar reviews. But the most recent updates will possibly (possibly being the operative word) give this program the jump-start it has lacked so far.

NOTE: contrary to popular opinion the enhancements to HARP and HAFA have not taken effect yet. In fact they have not even been finalized and are not scheduled to be for several weeks, with an implementation date months out.

The proposed modifications should help underwater homeowners refinance at today’s low rates by lifting the 125% loan-to-value restraint… this is HUGE! Proposed changes also void the requirement of a new appraisal in favor of automated estimates, and eliminate several risk-based fees.

Now here’s where I believe the overwhelming interest in these adjustments is coming from. For the very first time since 2009, “reality” is being addressed. Previous guidelines seemed to assume that the real estate and job markets were not going to get worse, and that the only homeowners needing assistance would be those who were already behind in their payments. At a time when virtually every economist predicted several years of negative growth in our economy, and more to the point in our real estate market, HARP materialized as nothing more than a symbolic gesture. Unfortunately the economists were right and the symbolism of HARP only infuriated us all.

I’m going to choose to be optimistic about these impending developments with HARP & HAFA. They’re far from revolutionary but definitely a step in the right direction.

Phew... it wasn't scary after all

What a weekend! I’m always amazed at the creativity of small children and their parents. I love Halloween, always have and still do. It’s like throwing a huge block party without a clue who’s on your guest list. If only for a few hours, your neighborhood becomes one big, very happy, very friendly family.

If you're anything like me you make a fair attempt to keep up with whatever is going on in your neighborhood. Between work and a house full of kids this isn't always practical, but the past weekend presented an especially eye-opening opportunity to do just that. Whether you were on the hunt for goodies with the kids, or joking with the neighbors while you handed out treats, (most of my duties were of the "hunting" variety this year) you can't help but notice that your immediate community is dotted with a lot of new neighbors, and more than a few For Sale signs. Correct me if I’m wrong, but this wasn’t always the case. Just a short time ago, if a neighbor moved in or out we all noticed, or at the very least were aware of it. Not so much anymore. True?

I’ve gotta tell you, it really was a pleasure seeing all the new folks, though I was a little embarrassed that I hadn’t met them before. But I couldn't say the same about all the For Sale signs, they were the scariest thing I'd seen all evening, that is until I actually gave it some thought. Remember back to that time when you  noticed your neighbors moving? Remember around the same time, news reports about first-time-buyers being priced out of the market? Again… Not so much anymore. I guess I’ve formed a new opinion about all those For Sale signs. A lot of my clients now are first-time-buyers. No longer blocked out of the market, they’re thrilled, and life is good for them.

My take-away from the Halloween weekend? The bag of tricks that our real estate market has become is not all horrifying, dig around a little and you’ll find some very sweet stuff in there.

Do you have a sweet story or a scary tale to share about real estate in your neighborhood? I'd really love to hear it!