Gary Welch Home Loans Blog Site

Tax Benefits 2011

2011-02-04T16:25:00.001-05:00

As most everyone is aware, Congress and the President came to agreement on extending the Bush era tax code. The existing income tax code is basically being extended for 2 more years. This extension is perceived to be a good stimulus tool to try to help the economy continue to rebound. Time will tell as to its effectiveness. There are several changes in the new tax law that will help most individuals going into 2011. Some of the more important are: * reduce payroll taxes by 2% - this is an across the board cut for all taxpayers * estates are not taxable unless they exceed $5M * unemployment benefits extended for 13 months for the long term unemployed * reduction or elimination of the Alternative Minimum Tax for middle income taxpayers If you bought a home in 2008 and claimed the first time homebuyer credit ($7500) it is now time to begin to re-pay that credit. The first installment is due with your 2010 tax return and is re-paid over 15 years. The 2008 credit is different than the first time homebuyer credit that was offered in 2010. The 2010 credit does not have to be re-paid as long as you live in the house for at least 2 years. Due to a recent tax-law change, you may be able to claim an enhanced “residential energy credit” for qualified energy-saving improvements. While Congress discussed limiting or reducing the amount of tax benefit associated with mortgage interest the final bill made no changes. A taxpayer may deduct interest on a mortgage up to $1M on a 1st mortgage and $100,000 on a 2nd mortgage or home equity line of credit. This deduction will almost certainly be up for discussion again in 2 years. As always, it is important to consult with your tax adviser before implementing any tax saving or tax avoidance plans.

Condominium Lending Update

2010-08-02T09:12:00.006-04:00

In 2008 and 2009, Fannie Mae and Freddie Mac greatly tightened guidelines for condominiums. In late 2009 HUD followed with the first update of their requirements in years. Most of the HUD reforms were adoptions of those of Fannie Mae. However, they did rescind their spot approval process which the industry had been using for years for existing properties. Now each condo project must be approved by HUD, or in some instances, a delegated lender. For those projects currently approved by HUD, they must meet some of the new guidelines before a loan can close with all the new guidelines being required at the time of the project recertification. There is also a limit on the number of loans that can be financed by FHA. This information is available on the HUD approved condominium website. Some of the guidelines that are currently causing issues with project approvals are: Litigation - If property is involved in litigation it should be for the collection of HOA dues. Fannie Mae will occasionally issue an exception for frivolous lawsuits. Delinquency - If more than 15% of the HOA are 30 or more days delinquent, then it won't get approved. Budget - It should show 10% of the income being set aside for reserve items. Special Assessments - will be looked at closely because the agencies want the budget to be adequate to pay the expenses and property repairs from the yearly HOA dues. 10% - No one group or individual should own more than 10% of the units which could include the developer if the units are not currently on the market, but are being leased out. Commercial Space - Fannie allows up to 20% and HUD allows 25%. Insurance - Required coverage is 100% replacement cost on the buildings, liability or at least 1 million dollars, and fidelity insurance, which is often referred to as employee dishonesty. This is for a 20 unit or more project, and requires 3 months of HOA dues for Fannie Mae and 3 months of HOA dues and the reserve account balance for FHA. Before listing a property, I think it would be a good idea to review a condo questionnaire to make sure the property can get financing. We will be glad to answer questions.

The City of Alpharetta, Georgia

2010-03-24T17:35:00.002-04:00

As Alpharetta City Councilman, I recently had the opportunity to sit with Bob Strader of The North Group to discuss the city of Alpharetta, how it is faring in the current economy, what projects are going on, what’s happening with Prospect Park and Westside Parkway and the likleyhood of Milton County. Bob Strader is a Realtor whose focus is on merging technology and real estate. He specializes in helping buyers search for homes online and leveraging technology to maximize online exposure for home sellers. He lives in Milton, GA and is passionate about nurturing and growing the North Fulton community. Part 1 of our interview is posted below. To view the entire interview, please visit the post on the North Fulton blog: http://www.liveinalpharetta.com/blog/?p=1622

Interest Only Demise

2010-03-24T16:48:00.001-04:00

Freddie Mac is no longer going to offer interest only products for loans after 6/13/2010. I expect Fannie Mae to follow Freddie’s footsteps and by Labor Day of 2010 the availability of interest only products will be slim. So if you or anyone you know wants to refinance to an interest only program, time is of the essence. It is too early to predict that interest only programs are going to be extinct but trends do suggest less availability.

Interesting Facts about 2009 from a Real Estate Perspective

2010-03-12T14:39:00.002-05:00

As many of you know, I attend various Tuesday morning sales meetings at various real estate offices throughout Atlanta. Sometimes I have been asked to speak about the economy or what are the hot mortgage programs being offered; and other times, I simply attend to listen to the leaders of the office talk about the sales activity and what is effecting their business. This week, I attended the Keller Williams Community Partners meeting and listened to Gene Tuggle go over some very interesting statistics that made me say WOW….So, I thought I would share them with you….Facts About 2009…. 1. US Mortgage rates average 5.04% which is the lowest average since Freddie Mac tracked this statistic going back to 1971. 2. 2009 affordability….Most favorable on record. 3. 2009 US Home Sales ranked 4th highest on record. 4. 69% of first time homebuyers stated they “desired to own a home” as the primary reason they purchased a home. 5. Only 6% stated they purchased a home for the tax credit. 6. 90% of buyers used the internet to gather information during the home buying process. 7. 66% of home buyers interviewed only ONE agent. 8. 66% stated they would use their agent again. Interesting facts about 2009….From the numbers, things were not as bad as some have stated and 2010 is projected to be a better year than 2009!!! Some lessons can be taught with these figures. The one that jumps simply off the page to me is that 66% of home buyers only interviewed ONE agent. This is obviously where “prospecting” pays off. Always be asking your current and past clients, friends, vendors and even the person who is your waiter at your next visit to a restaurant if they know anyone interested in buying or selling a home. By the numbers, you have a 2 in 3 chance of getting that deal simply because you asked the question.

Bernanke Speaks...Uncle Sam Throws Another Treasury Auction(s)…..

2010-02-23T18:08:00.002-05:00

Federal Reserve Chairman Bernanke will have two speaking performances this week starting with his semi-annual monetary policy testimony to the House Financial Services on Wednesday and then he will he will testify in front of the Senate Banking Committee on Thursday. While I don’t think the message from the two testimonies will differ that much, the market will be listening as to whether the Federal Reserve will continue their current position of keeping rates at current levels for an “extended period” of time. If Bernanke reiterates their commitment to keep rates low and the outlook on inflation seems to be in check for at least the next 12 months, look for rates to move marginally to lower levels. After last week’s rise in rates...any relief would be welcomed!!! In other news, Uncle Sam is throwing another HUGE treasury auction this week. Over $132B in bonds and notes will be auctioned this week starting today with $8B in 30 year inflation indexed bonds. $44B in 2 year notes will be auction tomorrow which should be received well. Wednesday Uncle Sam will auction $42B in 5year notes. Again, this auction is expected to be received well however...if this is not the case it will tee the ball up for a bad auction on Thursday for the $32B in 7 year notes which I believe is the “biggie” of this week's auction party. A poor showing at the 7 year auction will move rates notably higher. Keep your eyes on this auction...we need a good showing here to set the tone for rates for the next several weeks.

Market Looks Overseas For Direction

2010-02-16T15:12:00.001-05:00

The markets are concerned about Greece and several other European countries as to whether they will default on their debt. The potential economic collapse of several European nations has investors worried that this may spread into a global issue. The good news to this story is that many investors are making the “flight to quality” (investing in US bonds) which has kept our rates at current levels with some bias to lower levels. European finance ministers are meeting today in order to come up with a viable solution for their debt crisis. If a viable solution is reached, look for rates to move higher as the demand for US bonds will move to a more normal trading range. The best thing to watch this week will be the DOW. Higher DOW = Higher Raters...Lower DOW=Lower Rates. Economic Calendar for the Week…. Tomorrow we will get a look at housing statistics, Industrial Production and the minutes from the January Fed meeting. Housing starts are projected to have risen by 4.13% in January however, building permits are expected to have fallen by 5%. Both Industrial production and utilization are expected to have risen slightly in January giving some hopes that we may actually be emerging out of the recession. I still believe we need to see several more months of consistent growth before we can wave the victory flag. The minutes to the January Federal Reserve meeting will be released tomorrow. I don’t expect any surprises here but if their minutes hint that they may feel that the economy is beginning to pick back up….look for rates to move marginally higher. Thursday and Friday will produce the “Biggies” of the week with the release of the Producer Price Index as well as the Consumer Price Index figures for January. The market is looking for a minimal increase of .1% in both the Producer Price Index and the Consumer Price Index. If actual numbers come in at or even below these projections, look for rates to move marginally lower. Overall, I expect rates to continue to move within a very narrow range this week. Homebuyers need to take advantage of these rates and sign contract before the tax credit expires!!!

The “Three CardRule” andRESPAFact or Fiction?

2010-02-11T13:56:00.002-05:00

Over the years, I have heard that realtors have to give at least 3 cards out to their buyers since this is a RESPA rule. The article below dispels this myth and even goes on to say that violations can occur as easily with one referral as multiple referrals. The article below is written by Kate Hoskins of O’Kelley and Sorohan. “A number of licensed real estate agents have long held to the common belief that referring less than three mortgage lenders to a purchaser of real property is a per se violation of the Real Estate Settlement Procedures Act (“RESPA”), Section (8)(a). In fact, RESPA contains no such exact prohibition or mandate for what has become the common practice of providing three different lender’s business cards to each buyer. As providers of “settlement services” under Section (8) (a),mortgage bankers and brokers, as well as real estate brokers and affiliated licensees, are prohibited from accepting “…any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.” Therefore, it is the agent’s intent in providing a referral to a lender and the lender’s response to that referral and not the number of referrals that determine the parties’ compliance with RESPA. You can view the whole article on our Realtor Corner.

Bernanke Testifies This Week...Uncle Sam To Auction $78B In Notes This Week...

2010-02-08T18:49:00.002-05:00

While the economic calendar is filled mostly with “nice to know” economic releases this week, the market will focus its attention on Uncle Sam’s treasury auction, Federal Reserve Chairman Bernanke’s testimony in front of the House Financial Services Committee and January Retail Sales data. Uncle Sam will hold yet another treasury auction to the tune of approximately $78B this week in 3,10 and 30 year notes. Given what is happening in the “world economy” regarding several countries defaulting on their debt, look for this auction to pan out pretty well which should keep rates at current levels. The 3 year notes should do well while there may be some question on the 30 year notes (auctioned on Thursday). The better the participation from foreign countries in these auctions, the better chance we will have to keep rates at current levels. Federal Reserve Chairman Bernanke will testify in front of the House Financial Services Committee on Wednesday. This will include a Q&A session. While I don’t expect anything earth shattering from his testimony, it is certainly something to watch especially the Q&A part of this session. Any comments that he believes the economy is emerging out of the recession now would be a concern for rates. Once again, I don’t believe this will happen but if it did...rates will move marginally higher. On Thursday, we will get a look at January Retail Sales numbers. The market is looking for an increase in sales of approximately .5% excluding auto sales as compared to a –.2% in December. A number above the expect .5% increase will not be good for rates as they will most likely move marginally to notably higher. Even with all of what I have reported that will happen this week, your best bet on which direction rates will head is to watch the DOW….Higher DOW...Higher rates….Lower DOW...Lower rates!

Rates Flat To Slightly Higher As Market Sets Sights On Friday’s Unemployment Figures….

2010-02-02T10:24:00.000-05:00

Look for rates this week to take their direction from the DOW...at least up to Friday’s unemployment data. The market is looking for non farm payrolls to have increase by 5000 and the unemployment rate to have remained at 10%. If the actual numbers show any sign that this economy is beginning to emerge from our current recessionary environment, rates will move notably higher. Until then, if the DOW moves higher...look for rates to move higher.

Punxsuntawney Phil Sees Shadow...FNMA Announces Assistance On their Foreclosures...

2010-02-02T10:12:00.002-05:00

While we may be heading for 6 more weeks of winter since Punxsutawney Phil saw his shadow this morning, FNMA (Fannie Mae) may have warmed things up with their announcement of providing up to 3.5% in seller contributions on their HomePath Properties. Last Thursday, FNMA announced that people purchasing a FNMA owned HomePath property will receive up to 3.5% of the SALES PRICE to be used towards closing cost or their choice of appliances. This offer is available to any owner-occupant who closes on the purchase no later than May 1, 2010. “Attracting qualified buyers to the market and reducing the inventory of vacant homes is critical to stabilizing neighborhoods and helping the market to recover. Many families are taking advantage of the federal tax credit to buy a new home so this is a great time for FNMA to offer some additional help” said Terry Edwards, Executive Vice President of Credit Portfolio Management. Properties eligible for this incentive are listed on www.HomePath.com and most listing include detailed property descriptions, photographs, community and school information and more. For further information, go to www.HomePath.com or contact FNMA directly at 1-800-732-6643.

Federal Reserve Begins Pull Back on Mortgage Securities

2010-02-01T17:01:00.000-05:00

As reported to you last month, the Federal Reserve will be hitting its cap on purchases of mortgage backed securities sometime in March or early April. This program was created y the Federal Reserve to add liquidity to mortgage market which in turn was intended to lower rates, keep people in homes, slow the pace of foreclosures, increase home sales and ultimately help the economy to recover from the deepest recession we have seen since the Great Depression. The Federal Reserve will cut their purchases of mortgage backed securities by Billions, yes that is Billions with a “B,” each week as they approach their established cap. I have to say with all the “stimulus” programs that are out there through our current administration, this is one of the “packages” that has actually worked!!! Not to mention it has been a tremendous investment for the Feds since they have been purchasing undoubtedly the most pristine mortgages we have seen in probably 30+ years due to the radical changes in guidelines where borrowers actually have to have a job, verify their income, put money into the transaction, and actually have had to pay their bills on time. ...what a novel concept! As rates rise, the value of these securities will rise and the FEDS will actually get a huge return on their/our investment...as opposed to the other things the current administration has done which will ultimately cost us money. So, the only real “stimulus package” that has truly worked and will ultimately not only pay for it self but may actually make the government money is about to come to an end??? Do they really think we are out of the recession??? Where do they think rates will go without liquidity in the mortgage backed securities arena??? The answer is that rates will move higher, foreclosures will begin to rise again, and home prices will fall again driving the economy further into this recession and putting off any potential recovery for our economy for another year or two. Is there hope??? I believe so as we are once again into another election year which tends to be a great motivator for those running for reelection...especially if their constituents are unemployed and facing the loss of their home.

Just When You Thought That You Had Seen Everything...Appraisal Management Companies Entering Mortgage Business???

2010-01-28T10:08:00.002-05:00

I have now been in the mortgage business for over 26 years and I have seen some really interesting and some just down right ridiculous things. This one will fit into the “ridiculous” arena. It has been reported today that several AMCs (appraisal management company’s) are looking to enter the mortgage business. Yes...these are the same guys who are the beneficiaries of the current HVCC rules that all of us have to live by and the same guys who assign an appraiser from Conyers to do an appraisal in Buckhead. They are also the same guys who then pay this guy from Conyers half of what he used to make to do this appraisal in Buckhead….which, in many cases, has resulted in low and sloppy appraisals. The old saying of “you get what you pay for” could not ring more true in this case. Many of the large banks (NOT SUNTRUST), correspondent lenders, and mortgage brokers are forced to use these AMCs for their appraisals and the results have not been very good as most of you know. Now, the same folks are wanting to get into the mortgage business as they see this as a “value add” to their current business model. I, however, would argue that they have contributed to our current prolonged housing recession as their “sloppy” appraisals have truly killed legitimate purchase deals which have sent values throughout the subject subdivision to lower levels than they should be at since this purchase...if the price is reduced to match the appraisal...will be used as a “comp” in the subdivision driving all prices down. I would also argue that they have killed any chance of some current homeowners from ever refinancing their homes due to low values. Their “sloppy work” as well as sending appraisers to areas they are not familiar with has most likely added to our current recession issues as many potential refinance customers are being denied due to low appraisals and therefore they don’t lower their payments which would give them more disposable income for other purchases which would stimulate the economy. Now, these companies want to enter the mortgage business!!! Could there ever be a bigger conflict of interest than this??? The Federal Government continues to take a hard look at banks and in some instances...they should...But I cannot imagine how they could let this happen. Am I worried that AMCs are entering the mortgage business??? Given their current track record for customer service...Not really.

HUD Issues Final Changes….

2010-01-22T11:00:00.001-05:00

As reported yesterday, HUD was looking to make changes in their guidelines and now it is official!!! Most of these changes are effective with case numbers issued on or after April 5, 2010. I believe you will agree with me that they are not bad changes and in the case of property flipping…they are actually pretty good!!! I am providing the changes along with some insight on impact:

1. Seller paid concessions will be reduced from 6% of sales price to 3% of sales price. This is the biggest change. Six percent seller contributions usually meant a buyer to have 3.5% down payment and seller contributions would normally cover all closing cost and prepaids. Impact- buyer might need to have more money at closing.

2. MIP (Mortgage Insurance Prem) is being raised from 1.75% to 2.25%. This is not as big of a deal as it seems. This amount is financed into the base loan amount 99% of the time. It will not affect buyer’s cash to close at all and will have minimal impact on raising their monthly payment. When I first got into the business in 1984 the Upfront MIP was 3.75%. Over the years it has gradually ticked down to 1.75%.2.25% is still one of lowest percentages in FHA Upfront MIP over the last 20 years. Please do not let your buyer get hung up on this change. This change allows lenders to finance with only 3.5% down payment. Impact-perception may be big but reality it is not.

3. Monthly MIP on Loan to Values of 95% or greater will rise from .50 to .55. Again, I don’t see this as a “biggie.” Impact– A loan amount of $200,000 will experience an increased monthly payment of about $8 per month.

4. 90 Day Flip Rule has been TEMPORARYLY lifted. This means investors buying homes do not have to wait 90 days to sell if buyer is obtaining FHA financing. This is great as it will expedite transactions! Just keep in mind this is temporary, so stay in tune with industry updates. Also, this change goes into effect FEBRUARY 1, 2010!!! Impact- fewer headaches and more closings. Additionally this should invite more investors into the market to buy, fix up and sell homes. Good move by HUD.

Overall, I really don’t see any earth shattering things here. Probably a good financial move by HUD and should keep this valuable financing tool available for a long time.

Rates moved down slightly today!!! It is a great time to buy a home!!!

It’s a Buyer’s Market….On Steroids!

2010-01-22T10:40:00.001-05:00

A buyer’s market is simply when the advantage is to the buyer. Typically it is when there are more sellers than buyers. The first quarter of 2010 is a buyer’s market on steroids! Never have there been so many compelling advantages for buyers to purchase. First if eligible for the federal tax credit, the government is paying you to buy a home. Seriously! Second due to unprecedented number of foreclosures, house prices are down…way down. It would be safe to say on average in metro Atlanta down 10-20%. Third, interest rates at flirting with lowest levels in last 50 years and the fixed rate mortgage are the best value (and safest) instruments for mortgage financing. So in summary there are a flood of homes on the market to choose from at deep discounts. Rates are incredibly low. Sellers want to sell. A buyer can get a great buy from a motivated seller, with low financing terms on a safe fixed rate and get an additional reward from the government in the form of a tax credit. Forget the fact that Mark McGwire, Roger Clemens, or Alex Rodriguez admitted to being on “ROIDS”. The real story is the “ROBUST Buyer’s Market” in play for the first quarter of 2010. Call your Realtor now to start your own investigation into home ownership!

DEMS Lose Seat In House...Health Care Bill Now In Question...Wall Street Looks For Direction

2010-01-20T18:11:00.000-05:00

Last night the Republicans pulled off a huge upset in the State of Massachusetts by taking over the Senate seat once held by Senator Kennedy. For the first time in over 40 years the Republicans now control that seat which now makes things very interesting for the Health Care Bill as the Dems no longer have their 60th vote to push this through. Regardless of which side of the aisle you sit on this news has been favorable for interest rates….at least for today. The Federal Government is the mortgage markets biggest competitor in terms of attracting capital and if the Health Care Bill were to pass...the Feds would have to raise money to fund this endeavor which would compete for capital that could be directed towards mortgage backed securities which would keep rates low. The passage of the Health Care Bill would most likely move rates to higher levels….So, for now, we have missed a bullet and rates are holding steady with some bias towards lower levels. As noted yesterday in Market Watch, there is little meaningful economic releases coming out for the remainder of the week. Look for rates to once again take their direction from the DOW. If the DOW moves lower, rates will move lower which was exemplified in today’s trading. The mid-range ARM’s are beginning to come back in play as the 5 year conventional ARM is trading around 3.375% and the FHA ARM with 1 and 5 caps is now at 3.875% and borrowers get to qualify at the START RATE!!! FHA came out with their new proposed changes and I will update you on those in the next Market Watch.

Market Watch Week of January 18th

2010-01-19T19:38:00.000-05:00

The economic calendar is pretty much void of any big releases this week. Look for rates to take their direction from the DOW this week…A higher DOW will mean Higher rates and visa versa.

Rates Searching For A Direction...

2010-01-17T16:59:00.002-05:00

Roller Coaster Ride Continues... After getting hammered earlier in the week, mortgage rates have recovered most of their early week’s losses but continue to search for a true direction. Our “warriors of Wall Street” are not making things any easier as their opinion on the direction of the economy changes with the changes in our temperatures. While many of them had visions of grandeur that the economy was finally recovering they were hit with yesterday’s retail sales numbers and weekly unemployment claims. Retail sales actually fell in December (yes the Holiday shopping period) by .3% after seeing sales rise by a meager 1.8% in November. Unemployment claims rose last week by a surprising...OK surprising to our “warriors” but not to those who live in the real world….11,000. It was not surprising to me as I am sure many who were looking for jobs going into November took sales jobs at many retailers in hopes to land long term employment. The fall in sales did not help their chances of gaining permanent positions and once again found themselves looking for employment. The biggest fear on Wall Street is the specter of inflation. However, it is virtually impossible to have inflation when sales are down and over 17% of the population is either unemployed or underemployed. However, buyers should not take chances with interest rates. Our “warriors” could drive them notably higher at any time. It is a great time to buy while we are experiencing historically low rates and some of the lowest housing prices we have seen in years!!!

Market Watch 12-15-2009

2009-12-15T13:16:00.000-05:00

Mortgages continued to slide this morning on the announcement that producer price index figures rose all most double that what was expected rising by 1.8%. However, the large portion of this increase can be attributed to a sharp rise in oil prices during the review period. Oil prices in November breached the $80 per barrel mark but have retreated to around $70 per barrel as of today. Inflation cannot happen if over 10% of the US citizens are unemployed…hard to drive prices up when a large portion of America is unemployed and I would say there is probably another 7% which are under employed.

Tomorrow is the “big day” as the Bernanke’s two day FED party ends at 2:15 EST. The market will continue to look for any hint that either the FED will stop buying investment assets or that they may be looking to raise rates soon. I believe that this is a very remote possibility but still a possibility. If they were to do either of the before mentioned things, look for rates to move sharply higher….again…I doubt that this will happen but keep your eyes on the market after 2:15 pm tomorrow….Assuming I am correct and they continue on their current course, look for rates in improve slightly but nothing to get too excited over. Fixed rates today remain in the 4.875% range while 5 year ARMS are running in the 3.50% range!!!

Warriors of Wall Street

2009-12-14T12:50:00.000-05:00

Our “Warriors of Wall Street” will have plenty to chew on this week as we will get a look at a cornucopia of economic releases and the final Fed meeting of the year. On the calendar this week we will get a look at the producer price index, the consumer price index, housing starts and leading economic indicators. While all of these release reach the level of “biggies”, the market will really focus on what the FED has to say during their two day meeting which concludes at 2pm on Wednesday. Any hint of Bernanke and friends coming off of their current position of holding rates at current levels will send mortgage rates notably higher. While this is certainly a possibility, I believe that Big Ben and friends are not ready to take the chance of upsetting what may actually be the beginnings of a recovery in the economy. But, beware of the message that they will put out at 2pm on Wednesday.

Look for rates over the next 48 hours to meander at current levels until the FED meeting concludes on Wednesday. 30 year fixed rate mortgages are hovering at the 4.875% handle while 5 year ARMS are holding in the 3.50% range.

Rates on the Rise

2009-12-11T15:21:00.000-05:00

Ok…what does higher than expected retail sales and a poor treasury auction equal??? The answer….higher rates…Rates have moved roughly .25% in rate higher over the past 72 hours but have seemed to have found their spot, for now, holding in the 4.75% to 4.875% range for 30 year fixed rates and 3.25% to 3.375% for 5 year ARMS. The interest rate market is looking for something to move to higher levels and it got it with the news describe above. Look for rates next week to continue to try to push to higher levels in anticipation of another Uncle Sam Treasury Auction during the week. If the auctions next week are not received well, look for rates to push higher again. However, if the auctions next week are received well, look for rates to move slightly to lower levels. Don’t look for 4.5% on the 30 year fixed handle next week…I hope I am wrong. 30 day outlook for rates are to remain in the 4.75% range to 5.25%. I guess that is not too bad considering that these levels represent some of the lowest rates we have seen for over 40 years!!!

Today's Mortgage Rates and News

2009-12-10T12:07:00.001-05:00

The mortgage markets have opened up once again lower (higher rates) and 30 year fixed rate mortgages (conforming) are running in the 4.625% to 4.750% range while 5 year ARMS (conforming) are running in the 3.25% to 3.375% range. FHA / VA is at 4.75% today.

In mortgage news, believe it or not…the director of HUD is asking Congress to raise the minimum down payment on FHA loans from 3.5% to 5% and cut seller contribution back to 3% from its current levels of 6%...I thought this guy was an Obama guy…can’t see how this would be good for housing the market but I will keep you updated. On a brighter note!!! There is a bill floating through the US House which would eliminate HVCC (the appraisal reform that we all have had to deal with over the past several years)…my inside sources on Capitol Hill are telling me that this bill has some legs and could get passed before the end of the year!!! The elimination of this bill would allow us to pick our appraisers for you deals like we did in the past!!!

Want a great web page to find out what is going on in our business??? Go to www.thinkbigworksmall.com and click on the daily report. These guys do a daily show each morning!!! The news part is generally around 3 to 4 minutes long and it is entertaining!!! This is one of my favorites!!!

Tax Credit Extension Looks Good!

2009-11-09T11:42:00.002-05:00

The First-time home buyer tax credit that is set to expire on November 30^th looks like it WILL BE EXTENDED for contracts written on or before April 30, 2010 and closed by June 30, 2010. The US House of Representatives passed the extension Thursday, November 5th with a 403-12 vote (would love to meet the 12 guys who did not vote for this). This vote by the House followed a unanimous vote by the Senate on the Bill on Wednesday, November 4th. The Bill now goes to the President and is expected to be sign by maybe as early as this week!!! The Bill also added two other noteworthy items. The first is a tax credit for existing home owners on new purchases up to $6500 (must have resided in current residence for the past 5 years). The second addition to this Bill was that it raised the income limits from $75K for single taxpayers to $125K and joint taxpayers from $150K to $225K.

It appears that our elected officials in Washington finally understand that this is one of the stimulus ideas that has actually worked. The first-time home buyer tax credit has truly stabilized home prices over the past several months and a lack of an extension of this credit would have certainly driven home prices 5% to 10% lower over the next 90 to 120 days. The addition of a tax credit for existing home owners should only enhance the power of this economic stimulus package in the real estate area.

Tax Credit Deadline for First Time Home Buyers

2009-10-16T16:49:00.005-04:00

Not managing expectations of the first time home buyer regarding the urgency to close before Dec 1st in order to realize the tax credit is like “flirtn’ with disaster!” As of today, there are only 26 business days left until Dec 1st - Veteran’s Day, three days during Thanksgiving, and not counting the last day of the month reduce the actual number of business days from 31 to 26. And, and November only has 30 days in the month! The lending industry is requiring perfection on properly documenting every loan file before the closing package can be released to attorney’s office (see my most recent blog post "Is the Loan Clear to Close?"). It takes longer to clear conditions on each loan. Appraisers must spend more time documenting their appraisals by supplying additional comps or commentary to justify or defend their value. Over half the sellers are banks. Banks will move at their own pace! Do not expect banks to respond quicker to offers, counters, etc. as the deadline nears expiration. Rates are low, home prices are deeply discounted, and the eight thousand dollar federal tax credit is in play. There has never been more incentive or opportunity for a first time home buyer. Activity has picked up as motivated buyers move with urgency to write a contract and close by 11/30. This is a great opportunity to enjoy a run in business that we all welcome, to help buyers realize the American Dream of home ownership, and to help buyers improve themselves financially with instant equity and tax benefits. However, absent of setting expectations to the buyer on time frames and responsibilities, this is a recipe for disaster that can crush clients’ hopes and destroy our professional reputations. We must plan and anticipate if we are to best serve our clients! To learn more about setting expectations for the buyer, to view tips, a proactive timeline, pertinent questions and answers and important information on FHA financing and the FHA flip rule, please read this entire article posted on my website under "News Alerts." Let’s get our buyers motivated and EDUCATED. Let’s get our sellers motivated and EDUCATED. Collectively let’s pull together (realtors, lenders, attorneys, appraisers) to ensure our first time home buyers capitalize on this tremendous opportunity! At the end of the day we will have guided our buyers through a labor intensive, time sensitive process. There is an awesome opportunity for us to showcase our expertise and value and ensure we earn future referrals from those we serve…..and avoid “flirtn’ with disaster” caused by missed expectations and opportunities. Please call me if you have any questions, if there is anything I need to clarify, or if I can help you with a buyer or particular scenario. I am eager to assist!

Is the loan clear to close?

2009-10-16T16:44:00.002-04:00

There is an old saying I heard while playing high school football, “Shoot for perfection and you will catch excellence.” In today’s mortgage lending environment, excellence is not good enough when documenting each and every loan file. Lenders are requiring perfection on every loan file. Why? I attended two industry seminars in the last two weeks. In each seminar I heard that each loan file must “achieve perfection.” Simply put if loans are not perfect they will not be purchased on the secondary market by Fannie Mae, Freddie Mac, VA or HUD. Lenders have no choice but to underwrite, review and audit the file to perfection BEFORE closing. Until this recent change (I saw it start this August) lenders would allow documents to be collected at closing or even after closing. NO MORE…not in today’s mentality that if a loan is not perfect prior to closing that is a risk a lender cannot take. Contracts must be fully executed with all addendums, and every initial must be on it. Cash to close must be verified to the extreme. Gone are the days of “lets close it and we can get outstanding information post closing.” Now keep in mind that requirements have not changed but the attitude toward getting every piece of information in advance has. Simply put lenders must have loans ready to be purchased to earn money. Loans not being purchased cost lenders financial loss that they cannot tolerate or absorb. In an attempt to mix humor with reality, I kid with clients and agents telling them we will ask for everything but a blood sample, or your first born….but it may feel like we are asking for that at some point. So getting loan is still the same- we must verify income, assets, cash to close, and credit. What is required to do that has changed…more is required and just as importantly all information is required before loan package can go to closing. Previously the big question was “Is the loan approved?” Now the BIG question is, “Is the loan clear to close?” We must all work together to supply documentation. Patience, cooperation, and communication are the key getting the loan “clear to close” and achieving perfection.