We just read the results of a survey (see below) that TD Price conducted and we were reminded that our goal at The Mettle Group is to deliver excellent experiences for each of our clients and to surpass expectations.

Mission: To enjoy every day playing the game of life, with dogged determination to constantly do better, serve more and improve the lives of all that we touch.

Vision: Through constant attention to clients’ unmet needs and anticipation of their desires we create the ultimate mortgage experience. We grow our business through exceeding expectations, building relationships beyond business and constantly striving to improve and add value to the lives of our clients and partners.

Values:

• Treat others as we would want to be treated.
• Ravenous hunger for improvement.
• Humility when we succeed and honesty when we fail.
• Do more to add value than anyone else is willing or able to do.
• “Say what you do. Do what you say. No surprises!”

TD Bank recently announced the results of their inaugural Mortgage Service Index. The index was designed to identify best practices and trouble areas in home financing and act as a service indicator for lending institutions. Below are some of the key findings of the survey.

Positive Experiences

The index identified the percentage of respondents who had a positive (“excellent” or “very good”) experience in certain parts of the home buying experience:

• 64% had a positive experience during the home buying experience
• 55% finding a good Realtor
• 55% with the home appraisal/inspection process
• 53% finding the right lender
• 53% with the length of the entire home buying process

What Creates an Overall Positive Experience?

Certain key aspects of the relationship with the lender were important to those who said they had a very positive overall home buying experience. They rated their lender as “excellent” or “very good” in the following categories:

• Responsive 74%
• Accessible 76%
• Honest and transparent 76%
• Instilled confidence throughout the process 73%
• Helped buyers understand the process 73%
• Kept buyer informed during process 73%
• Explained the mortgage and available options 72%

Other Key Findings:

1. On average, home buyers considered approximately two banks or lenders when applying for a mortgage
2. An equal number of those surveyed (43%) obtained information on the lending process from their bank and from their Realtor, demonstrating that Realtors are used as informative resources by consumers during the mortgage process
3. Only 34% of home buyers obtained a mortgage at their primary bank

Michael Copley, Executive Vice President, Retail Lending at TD Bank concluded:

“As the housing market continues to rebound, the growing number of buyers should be aware of what to look for in a mortgage partner and seek out a lender who will best guide them through the home financing process in order to create a positive home buying experience.”

Thanks to KCM blog for this post.

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BUT don’t throw the baby out with the bath water! FHA is much more liberal and forgiving in its underwriting guidelines and even loan amounts, which can go as high as $729,750 (check your local county for specific loan limits). Simply stated, FHA can be the best (and only) loan on the planet for someone who:

• Has less than perfect credit
• Has gifted down payment of less than 20%
• Has student loans in deferment
• Has low credit scores
• Wants to finance high dollar amounts with as little as 3.5% down

So let’s start with the facts about FHA, shall we:

Mortgage insurance:

• 1.75% Up-Front Mortgage Insurance Premium (UFMIP) on all loans and regardless of the amount you put down. This is typically financed into your loan, meaning you put 3.5% down but then add 1.75% back into the final loan amount to cover the fee. See my blog post here for an overview of these changes.
• The monthly Mortgage Insurance is based on how much you put down and the term of your loan (15 year term loan has lower MI than does 30 year). MI ranges from .45% per year to 1.55% depending on if your term, loan amount and loan to value. See page three on this link to see a chart with all the details.
• If you register your loan with FHA after 6/3/2013 and you finance greater than 90% loan to value, then the mortgage insurance will stay for the life of the loan. If you finance less than 90% loan to value, then it will stay on for at least 11 years. This has been of great concern to many clients; however keep in mind the total cost of FHA with today’s 3.25% 30 year fixed rates, is still pretty reasonable. Your APR will still be in the mid 4% range.

FHA is THE most flexible loan product in the world today:

• It will allow for just 3.5% down, which can be gifted or LOANED to you by a family member.
• You can borrow against a 401k, car or any other asset that you own.
• It allows you to be financed down to a 580 fico score.
• You can be financed two years out of a Chapter 7 bankruptcy.
• You can qualify while in a Chapter 13 bankruptcy and as soon as 3 years after a short sale or foreclosure.
• Also keep in mind when you get over $600k, it is the absolute least down payment option available in some areas with loan amounts up to $729,750.

So YES, FHA is now going to be more expensive, but it is also the most flexible, and all in, total costs considered, it’s still a very cheap loan with an APR in the mid to high 4% range as of today’s rates.

Last but not least, let’s talk Conventional and Private Mortgage Insurance:

Hands down, the lowest cost loans on the planet are conventional loans from Fannie Mae and Freddie Mac, which are the government sponsored enterprises that provide 90% or more of the conventional loans in this country today. With this lower cost come tighter guidelines and more underwriting scrutiny:

• Conventional high balance loan limits will go as high as $625k and will have rates that vary with the borrower’s credit score, loan to value, property type (condo, single family residence, 3-4 plex) as well as property use, such as second home or non-owner occupied.
• Conventional financing will allow you to finance up to 97% loan to value on the purchase of a new home up to the conforming loan limit of $417k.
• It will also allow you to have an 80% first mortgage and a second mortgage (up to 97% if you can find a second mortgage lender that will go that high) to avoid mortgage insurance completely.
• Probably the biggest difference with conventional financing is the flexibility in how to pay for the Private Mortgage Insurance (PMI). In the past, mortgage insurance was paid as a monthly premium, which can range from .28% to 1.35% depending on loan to value, credit score and the term of the loan (15 year is cheaper than the 30 year term).
• Today PMI can be structured as a one-time up-front premium, typically anywhere from .25% to 3% of the loan amount, or can even be financed into the rate as a lender paid mortgage insurance premium. This lender paid option is not as widely used, but I feel it is one of the best ways to structure PMI, especially if the borrower has a 3 to 7 year time horizon in the property.

Those are a few of the differences between FHA and Conventional financing today. However much you learned from this article, you should know one thing… This will all change very soon, the mortgage world is always changing and while it’s good to have a general overview and understanding, don’t try to figure it all out. It is more important to work with someone who is a true market expert and can be trusted as an advisor. I suggest checking testimonials from past clients and getting referrals when selecting a mortgage professional to help you.

Happy house hunting and best wishes,

© 2013 – JLM Industries, Inc.

Josh Mettle is a top producing Professional Mortgage Lender specializing in servicing physicians in Salt Lake City, Utah. Josh is also a fourth generation real estate investor, and owns a number of rental homes, apartment units and mortgages. If you’re ready to buy or sell residential real estate, get Josh’s latest free tips, tools and newsletter at http://www.joshmettle.com

FHA vs. Conventional… Which is better and what are the differences? | Utah Mortgage & Real Estate Information Blog

A word of warning to Ivy League Excel jockeys heading to Wall Street: You may end up in Salt Lake City. It’s a long commute to the Hamptons, and the nightlife can be … well … sobering. Then again, think of the skiing.

Utah, already home to 5 percent of Goldman Sachs workers, is gaining momentum in its bid to be Wall Street of the West. State economic development officials say they are in advanced talks with three major banks on projects that would bring an additional 1,000 securities jobs to Salt Lake City.

For finance companies, the strategy is a classic arbitrage trade. The state offers real estate and labor well below the rates demanded in the concrete canyons of New York or other finance hubs. And, in part because a high percentage of the Salt Lake City population has completed the Mormon church’s two-year missionary program, foreign language skills are abundant. More than half of Goldman’s Salt Lake workforce is fluent in a second language.

Utah is also sweetening deals with major incentives, offering credits of up to one-quarter of corporate tax bills. That means Goldman will receive $47 million in Utah rebates by 2029, provided it keeps about 1,100 workers in the state and hits certain investment hurdles. Four years after signing that deal, Goldman has already met the first target. It has 1,500 Utah workers and is still making a strong Salt Lake sell in its recruiting materials.

It’s not just tech support. Goldman now has asset managers and research folks in the state. It even recently added a team of investment bankers. Next month, the company will host its annual meeting in Salt Lake City, its first outside New York City.

The state has also notched smaller recruiting victories of late. Morgan Stanley has expanded its Utah operations three times in the decade since it opened an office there. In November, Royal Bank of Scotland committed to hiring 310 workers in the state, in exchange for $5.3 million in tax credits.

Granted, another 1,000 jobs won’t change the industry. But in a smaller city like Salt Lake, those jobs are significant, and over time, those zeros add up.

Thanks to businessweek.com for this post.

Investment banks eye Utah | Utah Mortgage & Real Estate Information Blog

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“Steve, I can’t manage to buy a house,” an attendee told me over the weekend in San Diego at Everbank’s Global Currency Expo.

“The last house I tried to buy had 65 offers on it and sold well above asking price.”

This guy was not alone…

Conference attendees from Florida to Phoenix told me similar stories. “The deals are gone,” they said. So they’re giving up.

But fear not, my friends! Market price – or even “above-market price” – on housing in America is still a fantastic deal today. Let me explain…

What’s happened in real estate is nothing short of extraordinary…

We went from a market with tons of supply and no demand to a market with no supply and tons of demand.

Many people are giving up… They think the deals are gone… They think, “Why should we pay market price, or God forbid, above market price, for a house now?”

I have an answer for you…

A couple weeks ago, I explained exactly how high home prices should go. In short, house prices nationwide are around $180,000. But by our math, “fair value” is over $260,000 today – about 45% above today’s prices.

How can our “fair value” be so high? One major reason is mortgage rates…

When it comes to mortgages, most people fail to understand the incredible power of “compound interest.” To put it simply, it’s about realizing how much money you pay in interest on a 30-year mortgage.

House prices today are at about the same levels they were in 1979/80 (adjusted for inflation). Back then, mortgage rates were 15%. At that rate, you’d pay $620,000 in interest over the life of that loan.

By comparison, at today’s mortgage rates of 3.5%, you’d only pay $106,000 over the life of the loan.

That is crazy…

As regular readers know, I have been extremely optimistic on U.S. housing – more so than any other major analyst on the planet.

The market has been roaring back recently. The official statistics of home prices are always MONTHS old. But median existing home prices are up 12% over the most recent 12-month period (February 2012-February 2013). That’s the largest 12-month increase we’ve seen since late 2005… near the top of the housing bubble.

And the big boom is happening right this second. We now have tons of buyers and not much supply. The downside of this situation is you’re not going to find the same amazing deals you would have a year ago. The upside of this situation is Economics 101: With no supply and tons of demand, housing prices will continue to rocket higher.

Folks at the conference shared their frustrations with me. They feel like they’ve missed it… that they can’t get the great deal anymore.

What most people don’t realize is that MARKET PRICE today is still a fantastic deal… Most people don’t understand compound interest and fair value. So most people today will back down… They won’t pay full price or more because they don’t really understand where we are now in housing.

In the grand scheme of things, full price today is still cheap. It takes a long time for house prices to reach fair value… They can’t jump overnight like stock prices. Housing is still incredibly affordable thanks to low mortgage rates. Coupled with no supply and tons of demand, we have a recipe for much higher housing prices in the next couple years.

Yes, it’s now much harder to get a good property dramatically below asking price. But buying at MARKET PRICE is still a bargain today.

I am confident that you will look back on today’s prices in two years and wonder why the heck you didn’t ACT.

The market has changed… but don’t worry so much. Housing is in a new bull market. And it is just the beginning…

Our uptrend is finally here. And it could last for a few years… at least.

Good investing,

Steve

Massive Changes in the Housing Market… What to Do | Utah Mortgage & Real Estate Information Blog

The article points out that in nearly every market, potential buyers are better off financially owning than renting. Another blog quoted by Forbes shows that buying a home is still 44% cheaper than renting despite rising home prices.

Forbes also states that housing prices are in line with income in all but the most expensive coastal markets, and even in our coastal cities, price-to-income ratios are very reasonable by world standards. The post ends with this line: “That would mean that all signs point to the foundation of a real recovery.”

Is The Housing Recovery For Real? | Utah Mortgage & Real Estate Information Blog

This enlightening 1994 one-hour program features Steve Jobs in an unscripted interview with the Silicon Valley Historical Association in which  Jobs gives advice to potential entrepreneurs. He discusses risk, failure, his own experiences, and learning the value of creating your own environment.

Steve Jobs: Secrets of Life | Utah Mortgage & Real Estate Information Blog

Over the last several years, there wasn’t any pressure on the buyer to adjust their offer for three reasons:

1. There were plenty of homes for sale
2. Prices were falling
3. Mortgage interest rates were falling

They buyer could find another home easily for probably less money and a lower mortgage rate. There was no downside to not ‘upping the ante’. However, in today’s market, things have dramatically changed.

HOUSING INVENTORY

A normal real estate market has between 5-6 months worth of inventory. Over the last several years, the inventory of homes for sale had skyrocketed to 10 months. Most buyers in almost any price range had a multitude of houses to choose from. Today, the national month’s supply of inventory has fallen below five months. In many markets, there is not enough housing inventory to satisfy the current demand.

Conclusion: If the buyer loses the house they are bidding on, there is no guarantee they will find a similar home anytime soon.

HOME PRICES

Because of the limited inventory, home prices are again appreciating. The Case Shiller Pricing Index revealed that house prices rose by 6.8% in 2012. Experts are projecting home prices to increase by 5% to 8% in 2013.

Conclusion: If the buyer doesn’t get this house, there is a good likelihood that a similar home will cost more in the future.

MORTGAGE RATES

The ‘cost’ of a home to a buyer is determined by the price of the house and the expense associated with the financing. Mortgage rates are projected to inch up in 2013. In a recent forecast, the Mortgage Bankers Association predicted that rates could climb as high as 4.3% by the end of the year.

Conclusion: If interest rates do inch up, the ‘cost’ of the next home could be impacted significantly.

Bottom Line

If a buyer truly loves the house they are bidding on, it probably makes sense to raise their bid now instead of waiting for another dream house to appear.

Thanks to KCM blog for this post.

Should Your Buyers Increase Their Offer? | Utah Mortgage & Real Estate Information Blog

Thanks to KCM blog for this post.

Real Estate is Back! | Utah Mortgage & Real Estate Information Blog