Julia's Blog

Course Corrections

mianmars@gmail.com (Administrator) — Fri, 01 Oct 2010 15:31:20 +0000

Course Corrections

Tomorrow at 4:30 am, I will leave the dark, quiet hotel parking lot for the bus. 9,000 other runners will make this same journey, exactly 26.2 miles up the canyon. It is really quite the spectacle, a race between strangers where an unspoken camaraderie and kinship is palpable in the air. We all know what it has taken for each of us to reach the starting line. Saturday morning long runs at 6:00 am…the dark, the heat, the cold; it is possibly insane that we push ourselves to cover a distance that seems longer than necessary. I have always thought 20 is a nice round number; if only Phidippides could have gone 20 miles instead of 26, but that is another story.

This will be the 4th consecutive trip I will make to this same destination. In the spirit of transparency, I have to say I almost quit. I cringe as I type the word “quit” as this strange word is not in my vocabulary. With an ankle injury that won’t quite heal, an extremely demanding work schedule, and the priorities any mother of 3 should have, itwas just harder this time for some reason. So I have done much of my training late at night in Provo Canyon (which by the way is good for speed workouts because the bats are out and you will run faster with bats chasing you)! But about 9 weeks ago I decided I would pull out this year.

One of my favorite people posted a great quote by Dale Carnegie on their blog. Looking back I am certain it was posted for me at the moment I needed it most. The quote read “Success in business, as in life, consists not only in the ability to persevere but the humble willingness to start over." For some reason this really impacted me and I thought about it for days. I realized this is exactly what I would do. Mentally start over.

It has been a really tough time for many people I know. It is no big secret that the profession I love, mortgage banking and real estate have gone through a very challenging 3 year period. Many good people I know have left the business or are now working for different companies. Mid-life course corrections that none of us wanted or could have dreamt of 5 years ago. For me, I have known I have to make a decision daily to persevere, live with abundance and be grateful for the opportunities and blessings which I receive every day. Maybe there is something else, part of our divine plan that we would have never been able to receive if that course correction didn’t come. Maybe it was good for some of us to be humbled. It was for me.

So, this week I will go through all my pre-race rituals I love. Driving to St. George with my daughters, pining on my race number and eating pancakes with my family after marathon glory. I can’t fathom now what I would be feeling if I would have quit. So, I will be at the starting line on Saturday and at mile 16 at Snow Canyon when the sunrise is upon me and the other 9000 crazies, I will feel blessed to have been able to start over and grateful to be with my comrades. Although I will not run my fastest time, and I will not qualify for Boston as I had hoped, I have been humbled. I feel like this one might be the most special because I discovered more of myself along the way. I know I am capable of all things; I will start, and I will finish.

Be well, stay strong.

Home Renovations That Increase Your Resale Value (2010 Edition)

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:10:48 +0000

Not all home improvements are created equal. Especially if you’re looking for “resale value” back from your work.

An article from the Wall Street Journal lays it out cleanly. Function beats flash these days so be wary of where you spend.

Environmental upgrades such as home insulation and energy-efficient steel entry doors are recovering a much greater percentage of their cost these days than major remodels including kitchens or bathrooms. This is especially true for homes that are already “over-improved” relative to the neighborhood.

Upgrading the biggest and best homes on the block can be a losing proposition.

The article’s findings include data from groups such as the National Association of Home Builders, Remodeling Magazine, and Consumer Reports. It lists the following home improvements among its top “paybacks”:

Steel entry door replacement : 129% cost recovery
Wood deck addition : 81% cost recovery
Vinyl-replacement window : 77% cost recovery

Energy-efficiency projects also recoup costs monthly in the form of lower heating and cooling bills.

Remodeling Magazine says a larger number of homeowners will remodel their homes in 2010 with less emphasis on upgrading kitchens and bathrooms, and more emphasis on adding new rooms. From an appraisal perspective, this is a terrific way to increase your home’s value — especially if your home’s bed/bath count lags your neighbors.

Before starting a home improvement project, regardless of whether your goal is increase resale value, talk with a real estate agent about other homes in the area and how they’re built. At worst, you’ll gather some ideas you can work into your plan. At best, you’ll keep yourself from over-improving.

Home Resales Boom Into The End Of The Tax Credit; Home Values Seen Rising.

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:09:38 +0000

Existing Home Sales rose in March, as expected. U.S. home buyers closed on 7 percent more homes as compared to February.

Furthermore, versus March 2009 — a month many people equate to the low point of the U.S. economy — sales volume was up 16 percent.

Existing Homes Data is tracked by the National Association of Realtors® and a closer look at the March data reveals some other interesting notes:

Year-over-year sales are higher for the 9th straight month
Real estate investors represented 19 percent of all homes purchased
First-time home buyers account for 44 percent of all buyers

Also worth noting is that the supply of available homes is down on a broader basis. At the current rate of sales, the existing home inventory will be exhausted in 8 months.

When supplies drops, home prices tend to rise. It suggests an underlying strength in housing that should support home prices through the next few months — especially as the home buyer tax credit finishes working its way through the system.

That said, real estate markets are local. You shouldn’t assume that what’s happening on the national level is also happening here at home. Be sure to check with your real estate agent about local market conditions before making a decision to buy or sell.

Spring 2010 FHA Guidelines Make Borrowing Tougher And More Expensive

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:08:38 +0000

Securing an FHA mortgage is about to get more expensive.

In a statement issued Wednesday, the Federal Housing Authority outlined policy changes to its mortgage assistance program. The shift is meant to both reduce the government group’s portfolio risk while strengthening its overall financials.

For consumers, the changes mean higher costs.

As listed in the official announcement, there are 3 major guideline updates for the FHA:

Upfront mortgage insurance premiums are increasing to 2.25% from 1.75%
Minimum downpayments for applicants with sub-580 FICOs are rising to 10 percent
Seller concessions are being limited to 3%, down from today’s allowable 6%

Furthermore, the FHA has appealed to Congress to raise an FHA borrowers’ monthly mortgage insurance premiums.

To read the FHA’s statement, it’s clear what the group is trying to balance. On one side, the FHA wants to provide affordable financing to families that need it. That’s its mission statement. On the other side, though, the FHA must manage the risk that comes with insuring lesser-quality loans.

To that end, the FHA is stepping up its enforcement of “bad lenders” in hopes of stopping problems where they start.

Also in its new policies, the FHA is introducing a “termination clause”. If banks or loan officers that produce more than their fair share of bad loans, they lose their right to originate FHA mortgages.

As a result, homebuyers should expect tougher FHA underwriting in 2010. Not because the FHA says so, necessarily, but because banks don’t want to do “bad loans”. Lenders are incented to turn down at-risk applicants and, already, we’re seeing examples of this. Despite FHA allowing 580 FICOs and lower, many banks have made 620 their minimum.

Some have other guideline overlays, too.

The FHA’s new guidelines don’t go into effect until spring. So, between now and then, the old guidelines will apply. Therefore, if you know you’re going to need an FHA home loan in the next few months, consider moving up your time-frame.

If nothing else, you’ll save some money at closing.

Buying short sales with FHA home loans

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:06:08 +0000

For the readers not familiar with short sales let us first define the term as it applies to real estate. As “short sale” on real estate is when the existing lien holder(s) agree to accept a lower amount than is currently owed on the existing loan(s).

If you need an example suppose the home owner has only one mortgage for $350,000 (existing payoff) on a home. Perhaps that home is currently valued only at $275,000. The home owner cannot refinance, the lender has failed to modify and foreclosure is looming so the lender agrees to accept a sales price equal to the current appraised value even though it is a full $75,000 lower than (short of) the payoff.

Answering the question, “can an FHA loan be used to purchase a short sale”, really is too simple. The answer is “yes” provided the property and transaction fall within FHA insurance guidelines. Remember FHA has maximum loan amounts, guidelines for property type and guidelines for property use.

Is FHA Trying To Become LESS Popular?

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:02:51 +0000

There is a buzz in the real estate and mortgage world that says that FHA is moving towards changing how they charge insurance premiums – again! And the proposal I am hearing is going to reduce the number of people who are eligible for the FHA Program, as well as make the program less attractive.

Let’s start by explaining that, contrary to the public’s consensus, the FHA is not a lender, they are a government owned insurance company. They collect premiums from borrowers and insure lenders of repayment, if those borrowers default on their mortgages….this insurance allows lenders to loosen their underwriting standards and approve many more applicants. Presently, they charge these premiums in two different ways:

The UFMIP (Up Front Mortgage Insurance Premium) for most FHA loans is levied at 2.25% of the loan amount. The good news is that while it is a closing cost, the UFMIP can be (and usually is) financed….added on top of the base loan amount. So, for example, on a $200,000 base loan amount has a $4500 UFMIP; therefore, the total loan amount is $204,500. Because it is financed in the loan amount, our borrower is paying $24.17 in their monthly P&I payment to cover it (at a 5% note rate).
The second insurance charged is the MMIP (Monthly Mortgage Insurance Premium). Currently, for most FHA loans is calculated by multiplying the principal balance of the loan by .55% and dividing by 12. Because the principal balance is constantly being reduced as payments are made, the MMIP adjusts downward annually until such time as the principal balance is reduced to 78% of the purchase price (which will be a minimum of 5 years, but typically 12-14 years). In our $200,000 example the MMIP is $91.67. This amount, too, is added to the mortgage payment.

As you know, a major factor in approving borrowers is that borrower’s ability to repay the loan which is determined by dividing their debt by their income. Any increase in payment makes it harder to qualify. In our example, our borrower’s qualification includes a total of $115.84 to cover the FHA insurance premiums.

Now look at the proposed changes. FHA wants to reduce the UFMIP to 1% and increase the MMIP to 1.55%. On its surface it doesn’t look tragic, but let’s look at our example $200,000 loan. Our total loan amount is now $202,000, which means the monthly impact of the $2000 is $10.74 (as opposed to the $24.17). BUT, our MMIP has been increased to $258.33 (a whopping $166.66 more)! In total, our borrower’s mortgage payment will go up $153.23!!!!

What’s the real impact? The same borrower that qualifies for a $200,000 FHA loan, based on their income, will only qualify for $172,000 loan. They will have to look in different neighborhoods and/or sellers will need to reduce their prices further to keep the same buyers interested in their home. It has the same effect as interest rates going up more than 1%….I shudder to think what the cumulative effect will be if this happens AND rates go up.

I am asking you to call your elected officials and tell them that they need to stop the FHA from implementing this….NOW!!!

This blog post was brought to us by our good friends over at kcmblog.com and Dean Hartman, the Chief Planning Officer at Continental Home Loans.

It’s A Good Time To Look At Ajustable Rate Mortgages

mianmars@gmail.com (Administrator) — Wed, 25 Aug 2010 19:01:02 +0000

Each week, government-led Freddie Mac publishes a weekly mortgage rate survey based on data from 125 banks across the country. According to this week’s results, the relative rate of a 5-year ARM is extremely low versus its 30-year fixed-rate cousin.

Consider this comparison:

In April 2009, the two products ran neck-and-neck with respect to rates
In April 2010, the two products are split by 0.99 percent

On a $200,000 home loan, that’s a difference of $117 per month to a mortgage payment.

Adjustable-rate mortgages aren’t suitable for everyone, but they can be a terrific fit given your individual circumstance. For example, any one of the following scenarios could warrant a 5-year ARM:

Buying a home with an intent to sell within 5 years
Currently financed with a 30-year fixed mortgage with plans to sell within 5 years
Interested in low payments and comfortable with longer-term interest rate and payment uncertainty

Additionally, homeowners with existing ARMs may want to refinance into a brand-new ARM, if only to extend the initial change date on the current note.

Before opting an ARM or a fixed, speak with your loan officer about how adjustable-rate mortgages work, and what longer-term risks may exist. The savings may be tempting, but there’s more to consider than just the payment.