FHA VA Blog

You probably have heard the radio advertisements for low rates. I was comparing the mortgage backed security (MBS) trading for the last two years and came across something interesting. The MBS is trading at around the same levels as they were in November 2008 when we saw rate not as low as this.

What does that mean?

My hunch tells me that since loan applications have fallen after the expiration of the first time home buyer tax credit, that the banks have decided that they need to infuse a new stream of applications for business through refinances. By releasing more yield to the lending world, we then are able to offer lower rates to attract you to refinance.

Should you refinance now?

Get some sound advice on whether it makes sense to refinance versus just being presented an offer. By spending 30 minutes with you I can let you know if it makes sense to pursue a refinance. All things go into the equation like how long does it take to make up your closing costs, are you going to sell in the next couple years, are you planning on paying this home off, are there other debts you could pay off to improve your financial situation with a skipped payment????

Give me a call to discuss your situation and spend 30 minutes learning if it makes sense for you to refinance or stay put.

Ray

303.779.0591 x101

The Board has stated that its intention in 226.36 (d) is to prevent deceptive practices and unfairness. In order to implement that “protection” the Board proposes that it will:

· Prohibit certain payments to a mortgage broker or a loan officer that are based on the loan’s terms and conditions.

· Prohibit a mortgage broker or loan officer from ‘‘steering’’ consumers to transactions that are not in their interest in order to increase the mortgage broker’s or loan officer’s compensation.

The Board is only authorized to implement these changes if the change is needed to prevent deceptive practices or unfairness.

On page 43237 in support of what it considers to constitute deceptive or unfair, the Board cites FTC requirements:

“First, there must be a representation, omission or practice that is likely to mislead the consumer.

Second, the act or practice is examined from the perspective of a consumer acting reasonably in the circumstances.

Third, the representation, omission, or practice must be material. That is, it must be likely to affect the consumer’s conduct or decision with regard to a product or service.”

Since the costs incurred by the borrower are clearly the combination of the front end costs, which the Board cites in its rule are fully and transparently provided by the Good Faith Estimate (See page 43234) and by the disclosure of the loan’s interest rate, there is nothing in the compensation paid from a lender to an originator that triggers any of the FTC tests.

It appears that with the Senate 85-2 vote on the amendments to H.R.3548, the Unemployment Compensation Extension bill; we may actually achieve an extension and an expansion of the First Time Home Buyer Tax Credit. Highlights, if the amendment, as considered in the Senate is passed with the Unemployment bill, include:

>  A purchase transaction will qualify for those entering a binding contract before May 1, 2010 with a closing date before July 1, 2010.

>  The credit is up to $8,000 for a married couple. ($4,000 individual)

>  The original tax credit provision is expanded to include purchasers who have resided for 5 consecutive years (out of the past eight years) in their primary residence to qualify for a tax credit of up to $6,500 ($3,250 individual) on the purchase of a new primary residence.

>  Income levels have increased to $125,000 (single [was $75,000]) and $225,000 (couple [was $150,000]).

>  If the purchase price is greater than $800,000 no credit is allowed. 

>  Persons stationed outside the United States on official duty for 90 days during the period after 12/31/2008 and before 5/1/2010 will have eligibility extended for binding contracts signed before 5/1/2011  and closed before July 1, 2011.

You might want to make sure here next month that your mortgage lender is legally doing business for you here in Colorado.

Colorado Faces Potential Loss of Half its Mortgage Brokers

Nearly half of the 8,729 licensed mortgage brokers in Colorado have failed to meet new state requirements and face losing their licenses Aug. 31. “We could be looking at a complete disaster,” Erin Toll, director of the Colorado Division of Real Estate, told the Denver Business Journal.

After Colorado enacted its mortgage broker licensing law in January 2008, all licensed brokers had one year to complete 40 hours of licensing education and pass a written test. By December of 2008, nearly 6,000 brokers had not fulfilled the new requirements. To avoid a potential blow to the state’s credit markets by revoking the licenses of a significant percentage of brokers at one time, the Division of Real Estate subsequently granted a 90-day extension.

However, as of July 2009, more than 4,000 brokers still had not met the requirements to maintain licensure. According to Douglas Braden, past president of the Colorado Association of Mortgage Brokers, if those brokers are active practitioners, and half of them lose their licenses next month, it certainly will present a significant problem for the state.

“When you take that many people that potentially were well-qualified, that were doing good business for consumers, and you take those allies away from consumers, it leaves them a whole lot less choice,” Braden told the Journal. “Less choice and more restrictive guidelines don’t mean we’re going to make more loans. It means we’re going to make a lot less loans, a lot less people are going to qualify and a lot less people are going to have someone in their corner.”

So you may have read my blog about the Denver mortgage credit certificate that is available. However, that is for just the city and county of Denver. Now there is a complimentary mortgage credit certificate available for the whole state. To learn more about the mortgage credit certificate and what it means to you in general as a first time buyer in Colorado, email or check out my other website at www.myonlinemortgage.net/mcc Make note that the Denver MCC is similiar to the statewide version I am writing about today.

Ray

One would say with all the media attention that you should be able to put an offer on a house in Denver for far less then the list price. Afterall, they say the market is soft and there are a glutton of foreclosures out there. I wanted to give you a quick snapshot of what is really going on in the housing industry here in the metro area.

For example did you know there are public websites that show you data on trends of what houses are listed for versus what they sold for?

Here are a few examples:

20040 Mitchell Cir Denver~ Listed for: $135,000 and sold for: $155,000

7157 Huron St Denver~ Listed for $105,000 and sold for $131,500

6971 Saulsbury St Arvada~ Listed for $135,000 and sold for $175,000

7179 S Kline St Littleton~ listed for $200,000 and sold for $250,000

So there is Denver, Littleton, and Arvada as examples. This is even happening in Aurora as well guys. So what I am getting at is don't completely think when going to make your offer that you can write it for whatever you want and the seller will cave in to sell to you. This is good signs that our market is stronger then you expect from what you might hear on the news. Keep in mind that these examples are bank owned homes, so you can imagine that they needed some work. Now think how an individual selling their own home with pride of ownership will be sitting if they want to sell at a reasonable price right now??

Also, if you have friends buying they may be able to tell you as many of my agent friends have. It is tough to get an offer accepted because the competition is fierce right now.

My advice is to be ready! Meaning have all your financial ducks in a row with a pre-approval not a pre-qualification. Make sure you are ready to write your offer and not hesitate or think through it too long, unless you don't care too much if you miss out on that specific house. While all this is going on, you can still get the sellers to pay closing costs, but if this continues to strengthen you will have less luck with the sellers willingness to pay closing costs for you.

Happy house hunting~

Ray

You may be thinking to yourself there is no way to give yourself a pay raise when you buy your home. What if you could buy your first home in Denver using a mortgage credit certificate that would allow you to adjust your W4 and take home more money every paycheck? What if that money directly allowed you to buy a home that were 20% more expensive than what you could qualify for without the mortgage credit certificate?

It is all true and not a sham! There is a program out from the City and County of Denver for qualified first time buyers to take advantage of a mortgage credit certificate. This certificate gives you the legal right to adjust your W4 filing with the I.R.S and take home 20% of the mortgage interest you would otherwise deduct from your taxes. So it becomes direct benefit to your finances when you buy, not later.

HOW does it work?

Let's say you bought a $175,000 home at 5.25% for a 30 year mortgage. We know you would pay roughly $9,187 in annual mortgage interest ($175,000 @ 5.25% = $9,187). Now take 20% of that $1837 for your annual mortgage credit certificate. From there you take the $1837 divided by 12 months and get a credit for $153 per month that you can have added back to your pay after you buy!

So, if your home payment (interest, taxes, mortgage insurance) on a $175,000 home were $1,027, then you would only have to qualify for $874 per month and in essence you could choose to qualify for more home, if you chose!

To learn more visit http://www.milehigh.com/housing/for-sale/mcc-program and you will see my number as an approved lender (the list is very short of approved lenders by the city and county)~

Call with questions~

Ray

303.779.0591 ext. 101

You may have heard or start to hear, that mortgage rates have gone up. In fact on new loans I am doing, I have seen anywhere from a .5-.75% increase in rates since May 21st.

So what is the reason for all of this you ask? Even though the fed is buying mortgage backed securities, they are being offset by the supply of mortgage backed securities hitting the market. The reason for this new supply is the result of all the mortgages that have closed as a result of the lower rates. Those mortgages have now been securitized and are being sold on the open market as mortgage backed securities. This new supply is offsetting the purchasing power of the fed and just may lead us to higher rates. As you can imagine there are still loads of mortgages that will be securitized and sold as mortgage backed securities. This could offset anything the fed can do in purchasing more mortgage backed securities.

My advice, if you were waiting for lower rates to refinance, you may miss the boat as the anchor seems to have been pulled.

I have been asked this question by many friends lately. I keep coming back with the same answer. Not because I am in the business, but because I do believe it is a great time to be a first time buyer.

You have to look at where things are at. Yes, the economy is not in the greatest shape. However, in Denver we have a more diversified workforce which means many people are in safe job positions. If there have been layoffs, they have been limited by the reorganization that has happened within companies, by figuring strategic ways to keep more people employed.

First, the real estate side of things. I am consistently seeing clients whoa re refinancing their homes, find that their value is higher then they expected. It is bucking the trend of what the media is putting out there. As an example, recently we got an appraisal back for a client who lives in Arvada. There is a section in an appraisal on your home that mentions the stability of the neighborhood. Through a few methods, including average time for homes to sell. Another is the valuation as increasing, stable, or declining. His home showed houses selling around his home in less then 90 days. Also, the valuation was showing as increasing in value. So the real estate economy in the majority of Denver is stronger then the media leads on to be.

Second, mortgage rates! These are at all time lows. We are in fact seeing rate in the 4.5-4.75% range consistently right now. What that means to you in buying your first home is that if you bought the same home today , but last summer when rates were closer to 6.5%, your payment would be $200 0r more cheaper for that same home per month. On the other side of that, if you wanted the same mortgage payment, it would allow you to buy a home that is $20-$30K higher in purchase price.

Third, There is a first time buyer tax credit available when you buy a home and close on it before December 1st of this year. This tax credit is up to $8,000 for single or joint filers. Or $4,000 each for those married and filing separately. If you reside in the home the next three years, the tax credit is your to keep. The tax credit is added to your federal tax return. So as an example if you were going to get a $500 federal return, you would get an $8500 return if you qualified for the full amount. The $8000 is derived by 10% of your purchase price. So as long as you buy a place over $80,000 you are eligible for the full amount. There are income limits as well, but click on the link I put in to read the I.R.S FAQs.

So if you wrap all of those together into is now a good time to buy, here is what you have. One of the stronger real estate economies in the nation, comparatively speaking. Low interest rates. A first time buyer tax credit. When you factor all of those into that real estate markets go in cycles, and we are heading towards better days in Denver's real estate market. So if you can still buy cheap, with low rates, and get $8000 free money to do so, ask yourself the question: Is now a good time to buy?

And if you need down payment assistance, check out CHFA ro CHAC for more information.

Let me know if you have any questions about this blog rwilliams@summit-mortgage.com~ Ray

Have you been trying to figure out a way to get the necessary money saved for a home? We know the first time buyer tax credit is available to qualified first time buyers, but what do you do in the meantime if you don't have the money upfront?

First, we should understand what a first time buyer is. It is someone who hasn't owned a home in the last three years. So even if you owned but it was over three years ago since you sold the home, you may be eligible.

The great thing about the down payment assistance in Colorado is that it is used through CHFA. Check out the link there to learn more about this program.

In a nutshell you can get a 0% loan for the necessary amount of your required downpayment (up to $6,000). This is yours interest free until July 2010, when it converts to an 8% interest rate and a 120 month term. Now you aren't required to pay it back when you get your tax credit, but you will then make payments if you don't. So some folks may not pay it back knowing they can use the tax credit to improve their house, reduce credit card debt, or to save for future needs. Just as an example if I decided to keep the money and not pay CHFA back next year I would pay on $6,000 , 8%, 120 months it would be about $72 a month I would pay back. Otherwise, I would pay it back when I get my tax credit and owe no interest for borrowing it.

There is also another option for downpayment assistance through CHFA and if you want to learn more click on the link above. CHFA is a great community based organization and can help the American Dream come true.

CHFA requires you to work with a CHFA approved lender, so if you are interested in learning more about CHFA let me know as Summit is an approved CHFA lender~

Ray

I was in a meeting last week and training today to be part of the lending force who will be able to offer the mortgage certificate to folks buying in the city and county of Denver.

The way it works is you will receive a credit based on a percentage of the mortgage interest you will pay in a given year. We all know when we buy a house that the mortgage interest is tax deductible. However, this credit allows you to adjust your W4 and increase your take home pay.

For Example, if you buy a $200,000 home at 5% interest rate you will pay $10,000 in mortgage interest over a year (thus tax deductible for your family). With the mortgage credit you will have $166 additional dollars per month in your paycheck while you own the home. This also is factored into your ability when you qualify for the house to offset your debt ratios. That is right it helps you when you qualify to buy the house as well as in your paycheck. You can use an FHA, VA or even conventional mortgage when you do this as well.

For more information give me a call to learn more or shoot me an email.

Ray, Branch Manager, Summit Mortgage Denver

rwilliams@summit-mortgage.com

303-779-0591 ext 101

As many of us know by now, the mortgage industry has seen high volumes of new applications due to record low rates. I received a call from a client a few Fridays ago who was having trouble with his lender he was trying to work with. It turns out this lender had been working on his refinance for 6 weeks. My client was told over and over his loan was almost approved, and to remain patient.

As a result of this misinformation he almost had a late pay report on his credit. After losing his patience he found us on google and called up. He and I talked and I explained to him that all the excuses and reasoning he had been told was incorrect and an attempt to buy time.

So the client came in two weeks ago and we got his loan into our system. I explained to him how a streamline works and the processes and time lines by which we would be working. After starting on the file we found that other FHA lender had assigned his case number (this is a number that identifies your loan to HUD, kind of like a social security number for your FHA loan). My client then asked the other lender to release the case number to us, again and again. Only to leave me having to call this lender's boss to finally get it done. Once we had that we submitted his loan to underwriting and within 3 days his loan was approved for closing. Now we are scheduled to close his loan on the 17th and will have taken us 13 calendar days once we got that case number into our names. He will get the rate he was expecting, but with a far superior straight forward service from us.

If you are refinancing and fill like you are getting the run around and not quite sure why it is taking so long to get answers, returned calls, or your loan closed let us know. We pride ourselves on making service to you as our first focus. And in these busy times I can say experience matters.

Ray