Florida Mortgage Blog

The Home Affordable Refinance Program is a Great Mortgage!

Still waiting on the revised limited edition Harp 2.0  that will help refinance customers more than 125% Loan to Value

1/31/2012  Is this too good to be true? I say no. From all the talk I hear , this may actually become a mortgage loan program someday. Certainly good stuff to talk about during an election campaign. To date, I do not have a channel that is doing this loan, but I will certainly let you all know when the time comes. (Perhaps in as little as 8 weeks.) How many banks want to step up and say, "Lets do loans on underwater homes today!) I would assume for this to happen it would have to be another form of government subsidy that has to be planned for.

If they actually do make it available this becomes a way for average americans to save $200-$300 a month on their mortgage and invest it back into the economy.

I have been working in the mortgage business in one shape or form for about 18 years now. I saw it go from smooth and steady to wild and crazy to slow. Watching everything going on, in my opinion, I think our regulation is slowing down the market factor for a lot of people. I don’t appreciate what our regulatory leaders did for appraisers with the Home Valuation Code of Conduct and I don’t agree with what they did with respect to pricing and the Dodd - Frank Bill. We are entitled to all of the money that we earn and our segment of the economy is just as important as any other. Appraisers lost 1/3 of their income with the HVCC, how much will mortgage people be affected?

Mortgage people and Appraisers are not responsible for what happened in the mortgage meltdown, so maybe our government could stop treating them that way.

Yes, I am against my little corner of the Dodd Frank law. It has made pricing a loan much more difficult and I do not see any benefit to the customer. This legislation basically causes us to charge too little on a small loan and too much on a big loan. I cannot bend and give someone a break because I am penciled in at a certain percentage.

Also coincidentally, thanks to the Dodd-Frank Law, I am seeing banks starting to charge for debit fees and their answer is that it is due to the Dodd Frank Law. I suspect that other sections of this legislation have a lot to be desired as well.

I have never been one to believe that our elected officials should have any kind of tenure in office. Dodd and Frank were in office during the years of Alan Greenspan and free market economy and the celebration and were very much a part of it. Now they seem to have an over-reaching bill. In 2012 the topic of repealing this legislation is a hot topic; let’s see how it plays out.

Comparing Fannie Mae Homepath and FHA 203K Mortgages.

Both of these options offer help buying the fixer upper or the just need a little fixer upper. The FHA option is much more versatile. It can be used for a Refinance or a Purchase and provides a budget for up to $35,000 in fix ups. It is more versatile because more types of properties qualify for this loan. The Fannie Mae Home Path is sort of an exclusive list that is currently owned by Fannie Mae. Click here: to visit the list of Fannie Mae Homes in Your Area.

The Fannie Mae Homepath loan is available on a list of Fannie Mae owned properties. The best part about this option is there is no appraisal and  much of your closing costs can be structured into the contract with the seller: (Fannie Mae) Homepath properties are your foreclosures which typically are a little lower in price but may have been neglected within the last 24 months.

A great benefit of Homepath is that there is no mortgage insurance in your payment. It is very similar to lender paid mortgage insurance in that the rate provided is higher but the mortgage insurance is factored into the rate. Instead of getting 4.25% for example with FHA 203K (with mortgage insurance) you may get 5.5% with HomePath  but no PMI. (These numbers are given just for the sake of an example) Another thing to think about is when you receive your interest deduction for your mortgage from the IRS, this figure is derived from your mortgage payment and has nothing to do with what kind of PMI you have on your loan.  

For more information on these two programs. Please visit the link that I have prepared for each one

http://www.prestonware.com/FHA203Kmortgageflorida

http://www.prestonware.com/Fanniemaehomepath

Florida Jumbo Mortgages and Florida Super Jumbo Mortgages have improved quite a bit in pricing and flexibility. Just the fact that banks are offering them again is good but actually the pricing I am looking at is amazing. Recently I have been shopping super jumbo 5/1 ARM's in the 4's and even Super Jumbo loans on investment properties in the 4's! Many of these sources will require the borrower to pay a point but that is O.K considering the substantial savings.

Of course there is always a little more money down on a jumbo loan but these adjustable rate prices are great. http://www.prestonware.com/JumbomortgagesFlorida Anyone considering a refi has probably lost a little value but already has "a lot of skin in the game."

This is indicative of a larger trend that many of our bread and butter programs that disappeared are slowly coming back. I am also seeing evidence of some good foreign national programs around but that is another blog for another day.

https://www.facebook.com/pages/Main-Street-Financial/193950753990431?ref=hnav

Come on over and check it out!

Despite all the gloom, however, there are growing indications that it is a good time to buy. Mortgage rates, which fell to 4.55% for the week ending June 2, according to Freddie Mac, are near 50-year lows. Homes have become more affordable than they have been in years

Such conditions might not last long. Moody's Analytics predicts that the number of distressed sales will begin to fall in 2013, and that prices will begin to edge upward then. Home building is at a virtual standstill, so the supply overhang isn't likely to get much worse. Meanwhile, demographic indicators such as "household formation"—the number of new households each year—are on the rise, and promise to take a bite out of the glut in coming years.

The upshot: "While we might not see rapid growth in the next couple of years, there are a tremendous number of positive signs that could lead to a rebound," says Anthony Sanders, a real-estate finance professor at George Mason University.

Long-term benefits of homeownership remain very much intact. For now, at least, you can deduct the mortgage interest on your taxes—a big perk for people in higher tax brackets. You get to paint your walls any color you wish, without having to clear it with a landlord. And assuming you can buy a home for about the same price as you can rent one, buying will give you the ability one day to live rent-free. Come retirement time, a paid-off mortgage means your monthly expenses are significantly reduced, and you have a chunk of equity to play with.

So what might the next five years look like? Once the foreclosure mess begins to clear up, say housing economists, the traditional drivers of the housing market—demographics, affordability, loan availability, employment and psychology—should take over.

Here is a glimmer of what the future may hold: While overall home prices fell by 7.5% in April over the same period a year earlier, according to CoreLogic, a Santa Ana, Calif., provider of real-estate data and analytics, if you exclude distressed sales, prices were off just 0.5%. So if you are in a market that isn't battered by foreclosures, you may be close to a bottom already.

"The regular marketplace is hanging tough," says CoreLogic chief economist Mark Fleming.

Here is a look at five key factors that will govern local markets over the next several years:

Household formation fell during the economic downturn as a weak economy led some people to stay in school, double up with roommates or move in with family members. According to Moody's Analytics, the number of new households renting or owning a home dropped to 578,000 in 2008 from nearly 2 million in 2005, just before the peak of the housing boom.

But household formation increased to nearly 950,000 last year, says Moody's, and should average 1.2 million over the next decade.

That, combined with increased obsolescence and higher demand for second homes, should begin sopping up excess inventory in much of the country over the next two years, Moody's says.

"Whatever the excess supply of housing is, it is shrinking pretty fast," says Thomas Lawler, an independent housing economist.

Some of the uptick in household formation is likely to come from the leading edge of the echo baby boomers, who have been waiting for the economy to recover before striking out on their own, says William Frey, a demographer with the Brookings Institution. That is likely to fuel an increase in demand for both rental apartments and starter homes.

The portion of people moving across the country has fallen to the lowest level since World War II, he adds. That is a sign that many people have put their lives on hold because of the weak economy.

"When things do pick up, there will be this pent-up demand for everything involved with starting a household," Mr. Frey says.

Of course, when prices in healthier regions begin to rise, many would-be sellers who have sat on the sidelines could begin putting homes on the market, muting the price gains at first, says Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School. Even so, she expects home prices to stabilize and begin to strengthen over the next two or three years.

There also are some powerful demographic cross-currents worth considering. The first baby boomers turned 65 in January, an age when demand for new homes falls and many begin to think about downsizing. "The baby-boom generation pushed prices up as they got older," says Dowell Myers, a professor of urban planning and demography at the University of Southern California. But in the coming years, "boomers will start flooding the market on the supply side" with larger homes, while fueling new demand for smaller properties with more services and amenities.

Rising home prices made renting cheaper than buying in many parts of the country. But that dynamic has begun to change: Housing affordability, as measured by the ratio of median home prices to median household incomes, has fallen below pre-housing bubble levels in just over two-thirds of the country, according to an analysis of more than 380 metro areas by Moody's Analytics.

Renting is still cheaper than buying in most markets, but rising rents and falling house prices mean that, in some areas, this won't be the case for long. Buying a home is already cheaper than renting in Chicago, Cleveland, Detroit and Orlando, Fla., according to Moody's Analytics. In other markets, including Dallas, Las Vegas and Sacramento, Cailf., the equation is likely to soon turn in favor of homeownership if current trends persist, the firm says.

Before buying a house, it is wise to compare rental prices for similar properties. To be ultraconservative, wait until the monthly outlays, including taxes and insurance, are equal. You also could factor in the tax savings of owning, which would make buying more attractive even if the gross monthly outlay is slightly higher.

The strength of the housing market depends largely on the economy. Rising incomes and increased employment tend to give more would-be buyers confidence and buying power. For now, job growth remains sluggish: On Friday the Labor Department reported that just 54,000 jobs were created in May, far below expectations.

Mortgage financing remains plentiful for borrowers with good credit scores and solid employment histories. (600 or better) But for borrowers who don't fit traditional lending standards, getting a loan can still be nearly impossible. In the first quarter, about 10% of banks tightened standards for nontraditional loans, according to the Federal Reserve. Meanwhile, higher down-payment standards are locking some would-be buyers out of the market. Just 35% of renters have the minimum 3.5% down payment needed for an FHA loan on the median-priced home in their market, according to a recent survey by Zelman Associates.

But conditions should improve over time, he says: "There's no question that it will gradually get easier."

"The long-term case for buying over renting remains in force. Yet nowadays, "People are simply scared," says Aaron Galvin, chief executive of Luxury Living Chicago, which finds rental apartments for wealthy clients.

Mr. Galvin says he has seen a 30% increase in business in the last year, driven by would-be home buyers who can afford to purchase a property but are choosing not to do so.

The portion of Americans who believe homeownership is a safe investment dropped to 66% in the first quarter from 83% in 2006, according to Fannie Mae, the government-controlled mortgage company.

But it isn't clear whether the fear will result in a prolonged change in attitudes, as during the Great Depression, or have little long-term impact, as was the case for the housing bust that shook California and the Northeast in the late 1980s and early 1990s. Eighty-seven percent of people surveyed by Fannie Mae said they preferred owning to renting, though access to schools, control over one's environment and other quality-of-life issues now are seen as the key benefits of homeownership, with building wealth and other financial factors viewed as less important. In addition, 67% of renters surveyed by Zelman Associates said they planned to buy a home in the next five years.

"Other buyers are showing less willingness to wait for the absolute perfect time to buy. Doug Yearly, chief executive of luxury builder Toll Brothers Inc., told investors in May that "some of our clients, after waiting so long, are starting to move off the fence and into the market, motivated by attractive pricing, low interest rates and, most important, the desire to take the next step in their lives. The family with elementary-school kids and a puppy when the housing debacle began five years ago now has middle-school kids and the dog weighs 80 pounds."

Here are 5 subtle ways in which a credit report can be tweaked to improve a score, even for good credit customers.

1. Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se. But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.

2. Incorrect former addresses. This one is my favorite. Of the 19 percent of consumers who spotted an error on their report in a recent study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score. A misreported address can come from anywhere but usually it happens when you are applying for a card or a loan and the credit representative creates a typo in your application. The credit bureau recognizes this as different and creates a red flag. As years go by and you truly move around or apply for more credit with typos the bureaus will look upon this as instability. You want to clean out, old , old addresses or typos with your address as well as your jobs and your name.

3. Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened by you in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or loan in your name If someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems

4. Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting. But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your credit scores: how much credit you have available, and how much credit you have used. If you have account balances that show up on your credit report as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can lower your overall scores.

5. Derogatory items that should have aged off. Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy. If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned. The problem here is that collections get bought and sold and the new collection will restart the clock all over again. If you clear an item you have to make sure each and every creditor is made aware that you settled the debt. The problem with settling old debts, sometimes this will temporarily reopen an old would on your report . Best not to do this,during the application process.

Beyond that, if you’re close to a credit tier cutoff, like 600-620, 620-640, 640-660,680-700, depending on your loan type, even a few points’ difference can be the difference in the interest rate you will receive.

Brokering will be on the decline from now on. As of April 1, 2011 any major lending institution who does not have access to a bank line will be effected by the recent law changes with regard to loan originator compensation. The capping of yield spread will mean big trouble for companies trying to stay afloat.

Basically, a lender can no longer pay a loan broker a yield-spread premium, which is tied to the rate or terms of the mortgage. The fee that they will earn will be the same for each and every interest rate offered.

The problem with this rule change is that mortgage brokers as companies are no longer allowed to charge application fee which is a standard and acceptable fee to cover overhead. (My application fee is $595.)

Personally I am unaffected by the rule change but hate to see another step taken against mortgage brokers by Washington.

As I mentioned in previous posts Fannie Mae is expected to come to an end in about 6 years. These steps will all improve the importance of the local community bank to lend to the communities they are located in. (which is something they are supposed to do in the first place.)

I expect to see all sorts of interesting new loan products on the horizon as lending becomes more privatized and new players emerge on the scene.