The post appeared first on ILoan Home Mortgage.

1. You sell your old home before you buy your new home;
2. You buy your new home and sell your old simultaneously (same day closings);
3. You buy your new home before you sell your old home.

Few people choose to sell their old home before purchasing the next for fear of homelessness. Moving your belongings into storage and finding temporary living accommodations is not for everyone. But it does reduce the amount of variables and can give some home buyers peace of mind, knowing one-half of the processes is already behind them.

Buying and selling might seem difficult if not impossible but it happens all the time. In fact it happens most of the time. The key is working with a good realtor who can represent you on both your sale and purchase. Using the same title company on both sides of the transaction is helpful but not necessary. Typically, you would close on the old house in the morning, bring the proceeds from the sale to your second closing as either a cashier’s check or having the title company send a wire to your purchase closing in the afternoon. This happens all the time.

There is a third option– buying the new home first and selling old one later. If you are dependent on proceeds from your old home for the down payment, this option may not be for you. But if you 5% down and can income qualify, this third option is worth considering. If you are asking yourself, “why put down 5% now, if I can put 20% after I sell and avoid MI?” it’s only because you haven’t heard of recasting.

Recasting is an option available from select lenders which allows for a second down payment on a purchase. That is an initial down payment at closing and a second down payment any time after closing.

Marcus Downs – Mortgage Loan Officer – NMLS 321363 – 612.867.0719 – marcus@iloanhomemortgage.com

The post Buying While Selling appeared first on ILoan Home Mortgage.

In 70% of the major markets across the nation, it takes just 1.9 years to break even on a home purchase (in the Twin Cities it’s 2 years exactly), compared to renting the same house. A Zillow analysis of rent-versus-purchase costs examined data through the fourth quarter to determine the “break-even horizon.”

Zillow’s home search tools are weak but their research is excellent..

Considering the largest 35 metros, the home purchase break-even point is longest in Washington D.C. (4.5 years) and shortest in Dallas (1.3 years).

You would also need to live in a home for three years or more to break even on comparable rent in Baltimore, Boston, New York, San Jose, San Diego and Los Angeles, according to the report.

But Cleveland, San Antonio, Kansas City, Houston, Atlanta, Detroit, and Indianapolis — along with Dallas — are cities where the break-even period is 1.5 years or less.

However, home affordability may be slipping away within the next 2 years

But two years is also a benchmark for another important home buying timeline. In an analysis of national price appreciation and household income, Black Knight Financial Services finds home affordability to currently be favorable by historical standards, but headed in the wrong direction within the next couple of years.

Today, 21% of median income is required to purchase a median-priced home with a 30-year fixed-rate mortgage. That’s down from 33% in 2006 and still below the average of 26% in the “stable years before the housing bubble,” the research firm says.

However, considering the current rate of home price appreciation, combined with a half-point (0.5%) annual increase in mortgage interest rates, the near-term forecast is not so optimistic.

“We see that in two years home affordability will be pushing the upper bounds of that pre-bubble average,” says Black Knight senior vice president Ben Graboske. “At the state level under that same scenario, eight states would be less affordable than 2000-2002 levels within 12 months and 22 states would be within 24 months.”

The firm says both Hawaii and Washington, D.C., are already less affordable than they were during the pre-bubble real estate market.

If home prices and interest rates continue to rise at the same pace, nationally, the average monthly payment on the median home will rise by $114 within 12 months and would be $240 more per month in 24 months.

Calculate your personal Rent vs. Buy breakeven here: http://www.zillow.com/rent-vs-buy-calculator/

The post Buying beats renting in less than 2 years appeared first on ILoan Home Mortgage.

Each person’s situation is unique but here’s a sample of some things you can learn about on your call:

1. Having current property insurance (even if it’s just renters insurance) will usually saves someone $100/year on their new homeowners insurance.
2. Most MN homeowners policies automatically provide up to 10% of a person’s coverage limit for any detached structures. So a 2 car detached garage is usually automatically covered without needing to increase the replacement cost of a home. Whereas an attached 2 car garage needs to be factored into the replacement cost calculation. So in short, detached garages are typically covered for no additional cost to the insured.
3. Most companies offer some type (or combination) of “age of utilities” discount. This discount is typically somewhere between $50 and $250 per year. The 4 major systems that insurers are usually looking at in this regard are the roof, the furnace, the plumbing and the electrical.
4. If it’s discovered in the insurance underwriting process that the sellers of a given home have made a claim on their policy within the past few years, then there is a good chance that the roof might have been redone (or even a portion or slope of the roof might be new). This can make a big difference in someone’s insurance rates over first 10 years of home ownership.
5. When insuring an older home, it’s important to designate whether a person wants their replacement cost calculated with original or modern construction quality. The difference on this question could easily mean an extra $100,000 to $200,000 in replacement cost… which then of course drives the premium.
6. Anything a person can do to improve their credit will typically/likely have a positive impact on their insurance rates as well.
7. Insuring your home and autos with the same carrier is typically worth it, for MOST home buyers. There are of course scenarios where it is not… but in general it is.

In my experience, the clients I have that make these proactive calls end up having lower insurance costs as a percentage of their overall monthly payment as a result.  As you add to your personal financial checklist, you may want to include this task.  And if you’re planning on buying a home this year, make sure to call in before renewing your tabs.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post What Does Renewing Your Tabs in MN Have to Do With Buying a Home appeared first on ILoan Home Mortgage.

This is not the first time the media got this one wrong.  Take the Fed rate hikes between June of 2004 and July of 2006 as an example.  During this time, the Fed raised rates by over 4%.  During that same time, the yield on the 10 Year Treasury note increased less than ½ of one percent; having a nominal effect on mortgage rates throughout the two year period.  Here’s a chart showing what little impact the Fed rate hikes had:

This may or may not be the case moving forward but there’s absolutely no reason to think that rates are going to shoot up.  Especially when corporate bond markets are a mess, municipal bonds are suffering under the weight of Puerto Rico’s problem, Europe’s continued woes, instability in the Middle East, a stalled out stock market and oil prices drop due to oversupply.  All of these things are market weaknesses that make Treasuries look attractive.  In fact, a Fed rate hike could help rates because the Fed raising rates helps to fight inflation.  Inflation is the enemy of bonds because it devalues them and with that enemy in check by the Fed, rates could stay low or even drop.  In the near term, regardless of what the Fed does, rate forecasts are looking pretty good.  Here’s a sample from forecasts.org:

That’s a rather pretty picture so we encourage you not to get caught up in the media’s uninformed hysteria and rush a decision on your next home purchase.  The sky is not falling so take your time in finding the home you’ll really love.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Why a Fed Rate Hike Won’t Affect Mortgage Rates in the Short Term appeared first on ILoan Home Mortgage.

While there are emerging subprime lenders that will allow bank statements as an alternative form of verifying income, the premium loans are still owned by Fannie Mae & Freddie Mac or insured by the FHA, VA or USDA.  Their guidelines are as follows:

FANNIE MAE (CONVENTIONAL):

Being 1099’d or owning 25% or more interest in a company makes you self-employed.

Fannie Mae generally requires lenders to obtain a two-year history of the borrower’s prior earnings as a means of demonstrating the likelihood that the income will continue to be received.

However, a person who has a shorter history of self-employment — 12 to 24 months — may be considered, as long as the borrower’s most recent signed federal income tax returns reflect the receipt of such income as the same (or greater) level in a field that provides the same products or services as the current business or in an occupation in which he or she had similar responsibilities to those undertaken in connection with the current business. In such cases, the lender must give careful consideration to the nature of the borrower’s level of experience, and the amount of debt the business has acquired.

FREDDIE MAC (CONVENTIONAL):

Being 1099’d or owning 25% or more interest in a company makes you self-employed.

A two-year history of self-employment is required in most instances to ensure that income is stable. When the Borrower has been self-employed for less than two years, the Lender must document that the Borrower has a two-year history of receipt of income at the same or greater level in the same or similar occupation in order to consider the income for qualifying. In addition, the Lender must consider the Borrower’s experience in the business before considering the income for qualifying purposes. The Borrower’s individual federal tax returns must reflect at least one year of self-employment income. If the Borrower has been self-employed for less than two years or is relocating to a different geographic area, the Lender must consider the acceptance of the company’s service or products in the marketplace before considering the income for qualifying purposes. The Lender must document and explain how they determined that the Borrower’s income will continue at the same level in the new location.

VETERANS ADMINISTRATION (VA):

The VA doesn’t specify a level of ownership in a company that triggers being technically self-employed.  It’s safe to assume that an underwriter would use the same rule as Fannie Mae and Freddie Mac.

Generally, income from self-employment is considered stable when the applicant has been in business for at least 2 years.

Less than 2 years cannot usually be considered stable unless the applicant has had previous related employment and/or extensive specialized training.

FEDERAL HOUSING ADMINISTRATION (FHA):

Being 1099’d or owning 25% or more interest in a company makes you self-employed.

The lender may consider Self-Employment Income if the Borrower has been self-employed for at least two years.  If the Borrower has been self-employed between one and two years, the lender may only consider the income as Effective Income if the Borrower was previously employed in the same line of work in which the Borrower is self-employed or in a related occupation for at least two years.

RURAL DEVELOPMENT (RD):

The USDA doesn’t specify a level of ownership in a company that triggers being technically self-employed.  It’s safe to assume that an underwriter would use the same rule as Fannie Mae and Freddie Mac.

Income based on a two-year history of self-employment, in the same line of work, is an acceptable indicator of stable and dependable income.

Beyond meeting the requirements for length of self-employment, you’ll need to work with a loan officer who is knowledgeable about what documentation is necessary for underwriting and one that knows how to analyze tax returns.  This is because many do not know this and consequently don’t prepare an accurate Self-Employed Income Analysis prior to a loan going into underwriting; a must for a smooth loan process.  Often times loan officers will throw tax returns at an underwriter and hold their breath in hope.

It is a myth that mortgages are harder to obtain for self-employed people.  The guidelines are transparent enough.  If you work with a loan officer that knows what he or she is doing with self-employed underwriting guidelines and income analysis, the world of quality loan options should be just as open for a self-employed person as anyone else.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Length of Self-Employment Mortgage Guidelines appeared first on ILoan Home Mortgage.

Frequently enough, some home buyers want to split hairs between single family residence living and the condo life. They make a slight compromise on privacy for the sake of limited maintenance. They seek a larger floorplan perhaps. There are many reasons but in the end, they seek a townhome or row house. Excitedly, the purchase agreement is executed, the inspection is scheduled and it’s often at this point, . . they find out that they just technically bought a condo.

Sorting out the difference between a townhouse/row house vs. a condo is rather simple; one just has to know what to look for. The determinative difference, from a lending perspective, lies in the legal description of the property. And it’s easy. From a mortgage lending perspective, if the property has a Lot Block legal description, it’s a townhome or row house. If it has a Common Interest Community (CIC) legal description, it’s a condo. Regardless of what a property may appear to be to the eye, when it comes to the mortgage you’ll use to buy it…it all comes down to the legal description.

Knowing this difference has great implications on mortgage financing. Here are 3 examples of potential unforeseen pitfalls:

1. You Might get a Higher Rate if You Buy a Condo

With this warning, I’ll use Fannie Mae backed loans for simplicity’s sake. Unless one is putting 25% down or is taking a loan with a term equal to or shorter than 15 years, Fannie Mae actually imposes a pricing adjustment on condo purchasers. This pricing adjustment is the equivalent of ¾ of one percent of the loan amount which the consumer pays for in the form of a higher interest rate, higher loan cost or a mixture of the two.

2. Fannie Mae and Freddie Mac’s Rigorous Condo Approval Process

Prior to the real estate crash of 2008, underwriting review of the health of condo associations was very lax. Let’s be real. It was pathetic. After the crash, any major real estate financing institution was examining the origins of defaulted loans and many were found in condo (CIC) properties.   As a consequence many institutions, including Fannie Mae, came out with new and rigorous condo review processes. This is great for the condo buyer in that they are much better protected from unhealthy associations now that Fannie Mae is looking over their shoulder but it does add another layer of complexity to underwriting and can mean that it will take longer to bring a condo transaction to the closing table. Additionally, it comes with a cost. Often times, the condo associations themselves will charge 150-450 dollars simply to fill out the questionnaire required to process the condo approval in underwriting.

3. Condo Association Approval by FHA and VA

Fannie Mae wasn’t the only one to tighten their condo association approval process after the 2008 crash. By many people’s account, FHA and VA not only tightened but went waaaay overboard. Getting an association approved with FHA has become so onerous that very few and now in active approval status. Those that are can be found here. VA approved projects are even more scarce. The VA approved projects can be found here. Too often, FHA approved or VA approved buyers get all excited about a particular property only to find out after they’re ready to act on it, that they can’t buy it.

This is not to say that condo living isn’t fantastic and full of many very meaningful benefits that can’t be found in any other type of homeownership. I can personally attest that it does. This isn’t to say the buying a townhome or row house isn’t the perfect way to find the balance between single family residence life and condo living. It most definitely is. One is not better than the other. The right one for the buyer is the right one. It’s simply very important to make sure that when you’re looking at a particular property, one knows exactly what they’re looking at and what all those implications might be.

Happy house hunting!

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Think You’re Buying a Townhome/Rowhouse?….Think Again. appeared first on ILoan Home Mortgage.

To know whether or not an underwriter might do this on a loan, one must look through the eyes of the underwriters at the variables that they’ll be considering when making this decision. The underwriter will fundamentally be asking if it “Passes the Test of Reasonability” that a person might take the property as a primary residence over a retained property. When passing judgment on this question, the following variables are evaluated (usually in this order):

1. Hierarchy of Collateral
2. Similar or Superior Test
3. Life Variables

Hierarchy of Collateral

While there are exceptions to most rules, there is usually substance the original rule. There is a rule of thumb in mortgage underwriting that assumes that some types of housing are superior or others. If one currently owns a property of inferior occupancy desirability and is moving to one that is of superior occupancy desirability, a claim of occupancy would make sense. The opposite would not be true without overwhelming supporting evidence supporting a conclusion that despite the property type, it is superior (such evidence might come from appraisals, photos, specs, itemizations of home finishings, etc.). A listing of housing types from peak owner occupancy desirability to least desirability for owner occupancy is as follows:

1. Single Family Residence
2. Townhome
3. Condo
4. Duplex
5. Tri-Plex
6. Four-Plex

This is not to say that there’s no such thing as a condo that a reasonable person wouldn’t desire to occupy as a primary residence over a particular townhome. It is just to say that the default position of an underwriters mind will be to use this as an assumption of a reasonable hierarchy of collateral types.

The Similar of Superior Test

In cases where an underwriter sees a buyer purchasing a property of a specific type while retaining a property of identical type (for instance buying a condo while retaining another condo), barring an overwhelmingly persuasive Life Variable (below), they will apply the Similar or Superior Test. In other words, sticking with our condo to condo example… Is the condo being purchased similar or superior to the condo being retained? This would be the question the underwriter would be answering.

For this test, price is rarely determinative. Most underwriters don’t treat this as a reliable indicator since rarely is a previous set of market conditions from when a retained property was purchased similar to those the new property are being purchased in. Additionally, it is unknown if for instance, an original property was purchased through a distressed sale such as a short sale (where a seller wouldn’t have much of a profit motive). Usually, this variable is thrown out of comparative consideration altogether.

Instead, the characteristics of the two properties would be compared in detail. These characteristics would include bedroom count, bathroom count, finished square footage, age of construction, level of finish, amenities (garage, pool, outbuildings, etc.). There is no uniform method of documenting these comparisons. Clearly, there will be an appraisal on the property being purchased so that’s one source of information. For the retained property, sometimes it’s simply a matter of checking information on the property from county records. Sometimes, artificial intelligence software like advanced Automated Valuation Models are used. Sometimes, the new appraisal is compared to a previous appraisal on the retained property.

Life Variables

Life Variables are personal circumstances and considerations that are unique to the homebuyers that have specific impact on their decision to take a certain property as their primary residence. An obvious example of this would be proximity to a workplace. Less obvious examples of this might be far more unique circumstances such as someone with a driving impairment needing to live near public transit. This is no such thing as an acceptable or unacceptable Life Variable. They are just additional facts and circumstances that are taken into consideration when an underwriter is justifying/documenting a claim of a homebuyer to occupancy a property as his/her primary residence.

In the lead up to the mortgage meltdown and financial crisis, many investors made false claims of occupancy in order to make smaller down payments and get lower interest rates. Many of these loans defaulted and since then, scrutiny of buyers’ claims to occupy a property is far more rigorous. When many homebuyers are questioned on this, they take it as a personal insult to their integrity. They feel that they are being called liars when in fact; it’s not that they’re liars, it’s that many before them lied and now new homebuyers sometimes find themselves paying for those sins.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post How Underwriters View Owner Occupied Vs. Non-Owner Occupied Transactions appeared first on ILoan Home Mortgage.

While you’ve always been able to get basic school information via the Map View of your Home Scouting Report® but with this new tool, you’ll have access to these additional resources:

• My School – Demographics, trend data, graduation rates, contact information and more. It is a helpful “snapshot” of any district or school in Minnesota.
• Demographics – Student population by ethnicity and special populations.
• Test Results – View data by school or district, test type, subject, testing year, grade level, race/ethnicity, gender and more; trend data from 2009 to 2013.
• Graduation Rates – Select up to four student groups at once to narrow results; choose four-, five- or six-year graduation cohort rates.
• School Performance – The four components of the Multiple Measurement Rating (MMR) and the Focus Rating (FR), including proficiency, growth, achievement-gap reduction, and graduation.
• Student Progress – Growth students have made from 2009-2013.
• Academic Standards – How well students did on statewide exams according to the four levels of achievement.
• Staffing Profile – Full-time equivalents (FTEs) for teachers, paraprofessionals, administrators, and more; average salaries, experience and education levels, and student-teacher ratios.
• Federal Accountability – History of a school’s or district’s Adequate Yearly Progress (AYP) designations, broken down by subject, participation and proficiency, and graduation and attendance.

We’re not here to solve the riddle of which came first (great schools vs. valuable homes) and we’re not suggesting that this should or shouldn’t be a major factor in your home search.  We just promised you the best home finding tool in MN, and we’re delivering it; that’s all.

Happy house hunting and let us know if you need anything.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post A Deeper Examination of Schools Near Your Next Minnesota Home appeared first on ILoan Home Mortgage.

1. Are LLC’s eligible to be refinanced from the LLC to the individual owner’s name?
   1. Yes; so long as the person refinancing the loan has a documentable ownership stake of 25% or more in the LLC.
2. How long do I have to own a property in the name of a LLC before I can refinance intomy own name?
   1. Fannie Mae requires that title be held to the property in the name of the LLC for a continuous timeline of a minimum of 6 months for partial eligibility but for full eligibility it would be 24 months.
3. Fannie Mae limits the number of financed properties to 10. If I have several financed properties, which types of financed properties do and don’t count towards the 10 property limit?
   1. It’s easier to refer to the chart that show’s what is and isn’t included. See below.  When viewing the inset chart, note that sometimes it’s just a matter of changing the ownership structure of a certain property in order to meet the criteria of a property being excluded from the count toward the financed property limit (e.g. properties held in a S Corp don’t count): 
4. What percentage of the appraised value is eligible for financing?
   1. If you own 1-5 financed properties, 1 unit properties – 75%
   2. If you own 5-10 financed properties, 1 unit properties – 75% (unless it has been owned for less than 24 months in the LLC, then 50%)
   3. If you own 5-10 financed properties, 2-4 unit properties – 70% (unless it has been owned for less than 24 months in the LLC, then 50%)
5. Can I get cash out when refinancing my loans on investment properties when I own 5 or fewer financed properties?
   1. Yes.
6. Can I get cash out when refinancing my loans on investment properties when I own more than 5 financed properties?
   1. All of these transactions would have to be no cash out refinances.
   2. The only exception to that is in the case where someone is refinancing a property inside of 6 months of purchase and meets all of Fannie Mae’s Delayed Financing Exception (which is rare).
7. What are the required cash reserves for these transactions?
   1. If you have more than 5 financed properties, the required reserves would be 6 months of the principal, interest, taxes and insurance (PITI) on all second home or investment properties (your primary residence wouldn’t count). There is no flexibility in this.  Let’s say for the sake of easy math that the PITI on each of your properties was 1000 dollars and you had 9 second home or investment properties.  You’d need to show the capacity of having 54000 dollars in cash reserves.
   2. If you have 5 or fewer financed properties, the required reserves would be 2 months of PITI per investment property and second home.
   3. Examples of assets that can be used for reserves include checking or savings accounts, investments in stocks, bonds, mutual funds, certificates of deposit, money market funds, trust accounts, the amount vested in a retirement savings account, the cash value of a vested life insurance policy as well as proceeds from a loan or line of credit secured by automobiles, artwork, collectibles, real estate, or financial assets, such as savings accounts, certificates of deposit, stocks, bonds, and 401(k) accounts. There are a couple “must know” caveats though.  Any loan or line of credit payment will need to be factored into the debt to income ratio .

What a piece of cake! Am I right?

The long-term benefit of doing this can be fantastic since you’ll no longer have to rewrite your loans every time you have a balloon and start over at the beginning of your amortization schedule all over again.  Sometimes that almost feels like renting.  With these loans, you can set it and forget it.  Just remember to have a nerd as a loan officer helping you through the process.  You’re going to need one!

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post How to Refinance Your LLC Properties’ Mortgages into Your Own Name appeared first on ILoan Home Mortgage.

Mortgage Rate Forecast for 30 Year Conventional Loan

30 Year Conventional Mortgage Rate. Percent Per Year Average of Month.

Source: Forecasts.Org.  Updated Wednesday, October 15, 2014 – for the most up to date version of this forecast, click here.

There are of course plenty of decent reasons to wrap up a purchase this year.  Some of those might be:

• If you buy a home where you’re carrying higher balances on your credit cards from holiday gifts, your credit score will be lower than it usually is and that could adversely affect the rate you get on your mortgage and the cost of your mortgage insurance. 35% of your credit score is based on the ratio of what you owe on your credit cards vs. what you’re allowed to owe.
• Tax advantages could be realized in in tax filing season vs. next.
• Late fall and winter markets are easier to negotiate seller concessions (on price, terms or seller paid closing costs).

Whatever your considerations may be, we just wanted to make sure you were equipped with the information you needed to make a fully informed decision.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Long Term Mortgage Rate Forecast Going Into Winter Market appeared first on ILoan Home Mortgage.

The first element has to do with making it crystal clear to lenders what is expected of them when delivering loans to Fannie Mae or Freddie Mac or getting them insured by HUD. This clarity will mean that lenders won’t be afraid of loan risk nearly to the extent that they now are. The consequence for the consumer will be that the underwriting experience will become easier for them.

That’s important, but admittedly a little boring.

The exciting part is that they seem ready to bring back 3% down payment loans backed by Fannie Mae and Freddie Mac. These were excellent products before they got ran out of town in 2013. It would appear that they won’t have left us for even two years before making their return.

Having this product return is good for two reasons:

• Some highly qualified buyers only have a 3% down payment to bring to a transaction. They shouldn’t be excluded from homeownership or forced into an inferior loan (like a FHA loan) just because of something that happened prior to 2009. Especially now that the laws have changed regarding making sure that everyone can afford the loan their taking.
• 1% down payment purchases will again be able to be done without using monthly mortgage insurance or suffering an increase in interest rate. This can be done by incorporating Single Premium Financed PMI. A 5.1% down payment is made and a one-time buyout of the PMI is charged and then financed into the loan up to 97% of the appraised value or purchase price (whichever is less). This technique will have either the impact of dramatically lowering a monthly payment or meaningfully increasing a homebuyer’s purchase power.

This deal, that should shortly be announced, has been put together by elements of the government (HUD and the FHFA). The additional noteworthy element of this news it that it marks the first time that action has been taken at that level to meaningfully boost homeownership and free up the flow of mortgage lending. It will likely not be the last. It’s nice to be on the loosening side of the recession reaction curve! 

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612-234-7283 – charles@charlesdailey.com

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Fannie Mae and Freddie Mac Near Deal to Bring Back 3% Down Financing appeared first on ILoan Home Mortgage.

If you’re looking to pre-qualify for a home and want a lower rate or better loan program, iLoan recommends iQualifier to enable you to analyze your credit history with the same tools that lenders and credit agencies use. Additionally, it takes you beyond that analysis demonstrating how different financial decisions may affect your credit in the months ahead. iQualifier can help you:

• Better understand your credit standing
• Improve your financial decision making
• Achieve your financial goals (& target credit score)
• Save money (your credit scores affect insurance costs, car loans, credit cards, etc. so this can add up as an investment)

iQualifer offers a powerful credit management tool. Get the information and guidance you need to take control of your financial history and make your future happen.

Say goodbye to guessing – our Score Simulator enables you to make smart credit management decisions based on real information. Its’ powerful technology analyzes your spending and payment habits, simulates how various actions you take affect your score, and shows what different decisions mean for you and your family.

Based on your history, iQualifier will devise an action plan that helps you reach your scoring goals. This plan provides ongoing guidance and automatically adjusts to accommodate changes that might occur in your credit history, such as new purchases or loan pay-offs.

Every month you’ll receive a new TransUnion credit report and credit score so you can track your progress. Nothing is more motivating than knowing you are working toward the future you want.

We’ll send personalized, monthly email updates to help you stay on track.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist – 612.234.7283

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post How to Improve Your Credit Prior to Buying a Home appeared first on ILoan Home Mortgage.

Reason 3: CNBC Ranks Minnesota as a Top State for Business.

CNBC’s announcement may seem boring, and it definitely is, but from the perspective of a homebuyer or homeowner, it’s critical.  This is because we’ve seen how a local unemployment rate is often tied to the value of homeownership. Here’s a recent illustration:

This business climate has led to a top 10 unemployment rate creating a top 10 environment for job seekers leading many to set roots and raise their families through our top 10 public school system.

If this economy is generally considered to be a recovering, I can’t wait to see just how good this can get for the Twin Cities.

Reason 2: Minneapolis and St. Paul are the 3^rd and 4^th Ranked Cities for “Best Cities for Quality of Life” by NerdWallet Finance.

NerdWallet recently announced a ranking of 100 major cities.  Their methodology was unique in that it focused on, “income and health benefits, local economic strength, as well as work-life balance to find the best places for quality of life.”  Minnesota and Nebraska were the only two states to have two cities represented in the top 10.

Reason 1: It’s Officially Unaffordable to Rent in Almost All Major Cities.

I’ve seen people bend statistics in nearly any market to make the case for homeownership but when Zillow points out that, “homes remain more affordable to buy in 94 of the country’s 100 largest metros,” that “renting is more expensive than ever in 88” of them and the Secretary of Housing and Urban Development confirms this calling it the “worst rental crisis in this nation, ever” then it’s fair to say there’s something meaningful in the numbers.

The best way to illustrate this is an analysis of the Net Cost of Homeownership.  While you can run your scenarios using market rates, PMI calculators (mobile apps are better) and taxes from home listings using this calculator, comparing the median rent to a monthly payment on a typical purchase of a median home really drives the Twin Cities rent vs. own point home:

Net Cost of Home Ownership (sample 9/1/2014)

A decision to buy a home is deeply personal and your personal reasons should ultimately dictate the decision of when and why to buy a home but if your time is now, hey, . . . . doesn’t it feel good to be smart?

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Top Three Reasons to Feel Good About Buying a Home in the Twin Cities appeared first on ILoan Home Mortgage.

Definitions:

Today’s Rate – “Today’s Rate” is a myth perpetrated as a reality.  It is something the mortgage lending industry came up with because it’s an intellectually condescending industry that doesn’t believe that its clients can do math or understand complicated concepts (which is hogwash).  There’s no such thing as today’s rate, only “today’s rates.”  On any given day, at any given time, there are many rates with different costs from which a consumer can choose.

Par Rate – The Par Rate is not “Today’s Rate.”  The Par Rate for mortgages is really a reference point only (and one that any borrower should insist on finding before making a rate decision).  It represents the lenders offered interest rate that comes closest to having no Lender Credit, Discount Points or Origination Fees.  Establishing the Par Rate is essential to making the eventual decision on which offered rate from the lender a borrower would like to lock in.

Buy Ups or Lender Credits – This is where a client takes a higher than Par Rate and the excess lender profitability is credited back to the client to be applied against other settlement charges (e.g. homeowner’s insurance, escrow accounts, government charges, interim interest and title charges).  It is by using the Buy Up approach that lenders are able to offer “Low Cost” or “No Cost” loans (which is really a misnomer since the cost is really built into the rate).

Buy Downs or Discount Points – Technically, Discount points are a form of pre-paid interest but that’s a confusing way to look at it. One point equals one percent of the loan amount but discount points can also be surgically applied to reduce the rate using fractions of one point (i.e. 0.421%). By charging a borrower points, a lender effectively increases the yield on the loan above the amount of the Par Rate. Borrowers can elect to pay a lender points as a method to reduce the interest rate on the loan (typically in intervals of 0.125% to the rate), thus obtaining a sub-market rate and a lower monthly payment in exchange for this up-front payment.  Discount points, as opposed to origination fees (i.e. origination fee, processing fee, underwriting fee, etc.) can sometimes have tax advantages as well.  For more on that, click here.

Now let’s get to it.  How do you choose your interest rate?  Firstly, you need to insist on seeing “today’s rates” along with their associated costs vs. Today’s Rate (since we now know that’s not a real thing).  After requesting the rates, here’s what one’s options might look like (for illustration purposes only):

When choosing your interest rate, several variables should be taken into consideration.  First and foremost, if a purchase agreement includes seller paid closing costs, one has to remember this:  if you don’t’ use them, you lose them.  In other words, the sum of all non-financed settlement charges (origination fees, discount points, appraisal, credit report, title charges, government charges, escrow account, PMI premiums, homeowner’s insurance binder, etc.) must be equal to or greater than the amount of the seller paid closing costs.  If they are less, the difference will just be credited back to the seller and that’s a dreadful lost benefit for a buyer.  In short, maximize your discount points to get to the lowest rate using the entire allotted seller paid closing costs first.  If you’re wondering whether or not you want your purchase agreement negotiated with seller paid closing costs or not, this calculator will show why it’s almost always the best way to go; click here.

After taking seller paid closing costs into account, should one want to put more money towards the rate in exchange for a lower rate, different cost benefit analysis should be taken into consideration.  Taking the added cost to get the lower rate and dividing it by what would be the monthly payment savings can give a rudimentary break even point in terms of months.  That can be an informative way to start but making a final decision on rate can be more complicated.  The Time Value of Money can be taken into consideration.  The tax deductibility of paying points can be a factor.  How a choice between different types mortgage insurance can affect rate, payment and costs is often considered.  Ultimately, it’s a personal choice at this point.  None of these things can be weighed without the necessary information regarding an array of rates and costs and understanding how buy ups, lender credits, discount points and buy downs work.  The most important thing is getting to the point where you have all of this information and then make an informed decision and this is the road to get there.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Today’s Rate vs. Today’s Rates – Mortgage as a Second Language appeared first on ILoan Home Mortgage.

Some of the required seller disclosure items are quite silly considering that utility expenses are not one of them.  In the days of yore, in a lot of jurisdictions, one used to be able to contact the local utility and request the information for average monthly heating/cooling expenditures.  Now, for privacy reasons, that information needs to be requested from the seller.  And it should be.  It’s wise to ensure that this information is obtained prior to the expiration of the inspection contingency to ensure you have all necessary information for a complete decision making process.

After getting this information from the seller, a homebuyer can take the information from the inspection and identify potential savings.  Here are some relatively inexpensive but high impact energy efficient upgrades to consider:

• Add a hot water heater blanket – saves up to 9% in water heating costs
• Install water-efficient showerheads – the average family could save 2,900 gallons per year by installing WaterSense labeled showerheads
• Using modern or additional attic insulation
• Use weatherstripping
• Upgrade to a smart thermostat – can save up to 20%
• Use Energy Star® appliances – this definitely includes the furnace
• Use Low-flush or low-flow toilets – the EPA estimates that the average US home will save $90 per year, and $2,000 over the lifetime of the toilets
• Use high efficiency front load washers – can save up to 50% on water and electricity
• Replace incandescent with LED or CFL  bulbs – CFL bulbs are around 75% more efficient

Using the information from the seller on current utility expenditures to establish a baseline and comparing what energy efficiencies could be incorporated that aren’t currently being used (as would be revealed in the home inspection) can give a homebuyer the necessary, balanced idea of what to anticipate for utility costs.  This, combined with the mortgage payment, taxes, insurance, water, cable, internet, waste removal, home security and home phone service are the true costs of homeownership.  Failure to take them into consideration can turn an anticipated cash flow into a fantasy and leave a happy new homeowner with a financial hangover.

Charles Dailey – NMLS 79048 – Branch Manager, Loan Officer, Certified Military Housing Specialist

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

The post Your Monthly Housing Payment Beyond Principal Interest Taxes and Insurance: Utilities appeared first on ILoan Home Mortgage.

The post iLoan Brings a 90% Construction Loan to the Minnesota Market appeared first on ILoan Home Mortgage.

Here’s an outline of how it works:

• The lock may be for 60 or 75 days, but you must deliver an executed purchase agreement to iLoan within 25 days of the lock date to maintain the lock. The initial lock confirmation will reflect only a 30 day lock, but once the purchase agreement is received, an updated lock confirmation will be delivered to you reflecting the remaining days of the initial lock (to the 60th or 75th day, as applicable).
• Offered only on conventional conforming fixed rate, conventional conforming high balance fixed rate, VA fixed rate, USDA, FHA fixed rate, and FHA jumbo fixed rate products.
• Available for purchase transactions only.
• There is no up-front fee required.
• A .25 point price adjustment (0.25% of the total loan amount) to our 60 or 75-day price will be reflected in the price of the lock, in addition to any other applicable loan level price adjustments.

This program isn’t for everyone but it’s another way that iLoan tries to innovate to meet the demands of their clients and Realtor partners.

Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI

The ONLY civilized way to search for homes!

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

• The iLoan Lock and Shop Program
• Planning Your Home Purchase With a Mortgage Recast
• New Rules: If You Want an Adjustable Rate Mortgage (ARM) You Better Have Cash
• How to Choose and Calculate Your Private Mortgage Insurance (PMI)
• Seller Contributions Towards Closing Costs on a Home Purchase
• The Statistical Relevancy of the 7/1 ARM vs. the 30 Year Fixed
• What are extenuating circumstances?
• Fannie Mae Guideline Changes – Gifts, 97% Financing and Mortgage Insurance
• Waiting Periods on Bankruptcy, Foreclosure and Short Sales for Mortgages
• FHA vs. Fannie Flex 97 for Low Down Payment Buyers

The post The iLoan Lock and Shop Program appeared first on ILoan Home Mortgage.

Trouble listening?  Click Here

• Buying While Selling
• Buying beats renting in less than 2 years
• What Does Renewing Your Tabs in MN Have to Do With Buying a Home
• Why a Fed Rate Hike Won’t Affect Mortgage Rates in the Short Term
• Length of Self-Employment Mortgage Guidelines
• Think You’re Buying a Townhome/Rowhouse?….Think Again.
• How Underwriters View Owner Occupied Vs. Non-Owner Occupied Transactions
• A Deeper Examination of Schools Near Your Next Minnesota Home
• How to Refinance Your LLC Properties’ Mortgages into Your Own Name

The post Down Payment Assistance Programs in MN appeared first on ILoan Home Mortgage.

The difference between 95% LTV and 97% LTV financing may sound slight but on a macroeconomic level, it’s huge.  It will postpone purchases for multitudes of buyers; particularly first time homebuyers who might find themselves in situations where they have to save longer before they get into the game of homeownership.

Perhaps more profound will be the unforeseen effect of limiting choices on mortgage insurance.  For many if not most buyers, borrower paid monthly mortgage insurance on a conventional loan is the worst choice.  Often the best choice is Single Premium Financed PMI but even Split Premium or Lender Paid PMI are usually better choices than standard monthly PMI.  If these choices seem eye crossing, click here for a PMI comparison. This change by Fannie Mae will effectively make it more difficult for the consumer to take advantage of what has likely come to be the most advantageous form of PMI.  This is a serious unintended consequence and could have been avoided by limiting the LTV to 95 and the HCLTV to 97%.  A little forethought could have avoided this travesty.

To me, this is as backward looking as Fannie Mae’s recent guideline change regarding condos.  Yes the default rates were high in 2012 on condos but those defaults were on legacy loans not the new ones.  The time to tighten condo guidelines was in 2008 and not 2012.  This is no different.  The time to require higher down payments was 4 years ago.  This last thing we need right now.

Sorry for the bad news.  Don’t shoot the messenger.

Here’s an expert from the Fannie Mae Release Notes:

LTV/CLTV/HCLTV Ratio Cap Lowered to 95%

DU Version 9.1 will reflect lower maximum LTV/CLTV/HCLTV ratios for standard and MyCommunityMortgage® (MCM®) fixed-rate transactions secured by a 1-unit primary residence. Those transactions will be subject to a maximum LTV/CLTV/HCLTV ratio of 95% (instead of 97%). DU will continue to allow CLTV ratios of 105% when the subordinate financing is a Community Seconds® mortgage.

Note: HFA loans submitted to DU are subject to separate LTV/CLTV ratios. For specific HFA guidelines, lenders should contact their state Housing Finance Agency (HFA), and mortgage brokers should contact their DO sponsoring wholesale lender. As a reminder, lenders must have approval to deliver HFA loans to Fannie Mae.

Charles Dailey – Branch Manager, Loan Officer, Certified Military Housing Specialist – CA DOC, MN DOC & WI DFI

The ONLY civilized way to search for homes!

The Home Buyers Scouting Report® is provided directly to the buyer by HBM II, a licensed national real estate brokerage service company, not to or through a lender. The FREE home finding service is provided directly to prospective homebuyers by HBM II and its real estate brokers, as part of their ordinary real estate brokerage services. HBM II, Inc. works cooperatively with other real estate agents across the United States in attempting to find ready, willing and able buyers for homes listed for sale. The role of the Preferred Loan Officer is to assist in determining a comfortable home price range for Home Buyers Marketing II, Inc. (HBM II) to use when it is searching for property listings within the buyer’s search criteria.

• Length of Self-Employment Mortgage Guidelines
• Fannie Mae and Freddie Mac Near Deal to Bring Back 3% Down Financing
• Today’s Rate vs. Today’s Rates – Mortgage as a Second Language
• The iLoan Lock and Shop Program
• Down Payment Assistance Programs in MN
• Fannie Mae Increases Down Payments on MyCommunity® and Standard Loans
• Planning Your Home Purchase With a Mortgage Recast
• Tell a Veteran to Miss a Payment to Qualify for a Short Sale and You May be Up Against the CFPB
• The Only 10 Reasons a Lender Needs Tax Returns for a Fannie Mae Mortgage
• Different Mortgage Types and What They Mean to Buyers and Sellers in a Competitive Market

The post Fannie Mae Increases Down Payments on MyCommunity® and Standard Loans appeared first on ILoan Home Mortgage.