Mortgage Tea Lady

Are you ready to buy?

2010-07-06T12:40:00.000-07:00

So many people when they decide that they are ready to purchase a house, find out that the money side of things puts a spanner in the works. There are so many restrictions and changes in the lending industry, that what used to work simply doesn't any more and a borrower who in the past could qualify for $200,000 can now only qualify for $150,000. And the reasons why vary.

Obviously the borrower who is self employed may have a hard time qualifying as the attractive allowable write offs can reduce income that we can use drastically. For the schedule C borrower We have to use the adjusted gross and depending on the time of year will probably have to have an audited profit and loss in order to prove the income is still continuing. 2 years self employed income is pretty mandatory.

A larger not so obvious problem is the borrower who thinks they have co-signed on a car loan, but because the other individual pays the monthly payments we dont have to count the payment against them. This is not necessarily so. Our borrower may never make the payments (and can prove it), but if they show up in first position on the note/loan, we have to count the full payment against them.
More on this topic to come . . . . .

2009-09-09T13:11:00.000-07:00

Highest and best use of your money

2009-09-09T12:28:00.000-07:00

So a lot of customers come to me asking for a rate. oh and by the way they dont want any of that pesky mortgage insurance even though they may not have a 20% down payment.
Well condsider this. Say you think that you would like to put down 10% (which will incur some type of mortgage insurance) and it will pretty much clean out your savings account. But you figure that you will be much better off interest rate wise overall than if you put less down.
Interestingly enough, FHA is a great alternative. You only put down a minimum of 3.5% of the purchase price. However, the interest rates will often be as much as 0.5% better than a conventional mortgage with the above scenario.
But better than that, you have left some money in the bank for those odd emergencies that can crop up without increasing your monthly mortgage payments by a huge amount. Or perhaps you have a credit card that is charging a large amount of monthly interest that would be better paid off, than putting the money into the down payment.
Food for thought!!!

2243 Valentia St

2009-08-26T09:48:00.000-07:00

2009-08-04T12:53:00.000-07:00

What's Up With Condo's?
So condo's have been getting harder to finance since Fannie Mae said that they wanted full certifications for every transaction. It has been a relief to find that many condo's are financiable using FHA loans instead. Not only from the point of view that they don't have to have a certification if they are on the approved list, but also because you can put down as little as 3.5% (otherwise you would be restricted to probably 10% down payment).

However, all is about to change. In fact if you own a condo that you are currently trying to sell, you might want to get very realistic about the pricing and get it done before October 1, 2009.

The reason for this is very simple. FHA will no longer have an approved condo list. All condo projects, unless they received a certification after October 2008, will need to be recertified if they get a purchase contract after October 1, 2009. The worst part of this is that you can't get it done now, nor can the HOA get it done at all. It has to be through a lender or a builder.
So when October 1 comes around all hell will be let loose as buyers who would like to buy a condo with FHA financing have to wait for HUD (Housing and Urban Development) to approve the complex. You can only imagine how quickly a government department with 100's of applications is going to get that done!!

Now I'm always more optimistic after a restorative cup of tea, but it will be interesting to see exactly how this plays out.
The long and short of it is, if you want to buy or sell a condo with FHA financing, DO IT NOW and save yourself some angst!

A Good Week

2009-06-15T13:26:00.000-07:00

So last week was a great week! Why, (I hear everyone clammouring)? Couple of reasons. I had a closing that really stands out among all my closings. A first time homebuyer couple who have waited a couple of years before they purchase. Boy have they benefited from waiting. They'll be getting the tax credit when they amend their 2008 taxes, or in 2009 if they decide to take the credit then. They got an unbelievable interest rate (high 4%'s). But most importantly they are financially in a better place and position to buy a house.

But this wasn't the reason it was a great closing. It was great because they were so excited about having a home of their own. So much so that we took pictures of them with their new keys! It was awesome. In the lending arena where all the news is so negative, it just goes to show that good things are happening.

The other reason for the good week is because I'm going to be on TV. It was a very wierd experience and quite nerve wracking - I know why I decided not to be a movie star!! But the great thing about the piece that I did is that it is trying to show that there is good stuff going on in the real estate world. All the news does is post the doom and gloom. Even advertising draws it in (car ads saying you can return the vehicle if you loose your job). The reality is that Denver is doing really well, but we don't really hear about that. So watch for it on KPJR-DT Channel 38 at 11:00am and remember it's my first effort so try not to be too critical!

They Brought It Back!

2009-06-01T12:58:00.000-07:00

Hud has brought back the ability to use the $8000 tax credit for the down payment on an FHA loan. So far, as I mentioned before, CHFA is the only agency that has a program available to do this, but I'm sure other non profits will jump on the band wagon and have programs fairly soon. I'll keep you posted on that.

On another note, I had a great closing today. Why so good? Well this was a deserving young couple whose only problem was that their income went from a salary to self employed (same industry, same income). They were refinancing to reduce their monthly payments by $400 or so. The huge monthly savings were due to the fact that they bought their house for less than the appraised value, so I would be able to reduce their mortgage insurance as well as the interest rate. However, with all the restrictions we have these days it has been like pulling teeth as part of the income is considered unusable, which means that it appears that they are spending too much on their house payment. The long and short of it is, that after battling through major obstacles and objections with the underwriting and mortgage insurance company we closed today!!

It really felt great!!

So Close but Yet So Far!

2009-05-18T08:25:00.000-07:00

We got so close last week to being able to use the $8000 tax credit for first time homebuyers for the down payment. HUD came out with one of their mortgagee letters stating that short term loans by approved non-profit and government agencies could be used for the down payment and then paid off with the tax credit.
However, within a little over 24 hours HUD pulled the mortgagee letter, something that I dont believe has happened before (or at least is very unusual). At any rate we are back to square one, which is, see if you can get a gift from a relative, employer, or church group. Then if you decide to amend your 2008 tax returns and pay them back out of the goodness of your heart, good for you!
CHFA is still available at this time, although one wonders how long their new program will last. They allow you to use the tax credit and will give you an interest free loan until August 2010. They advise that you pay it off with the tax credit as the interest rate is high and the amortization period (pay back period) short making the payments quite large in some cases.

Time for a cuppa . . .

Why is getting a loan so jolly hard these days?

2009-05-06T14:58:00.000-07:00

It seems that everyday word comes down from the investors about one more thing that's going to make life more difficult for a borrower. As if it isn't hard enough already. Guidelines change with out much notice. Some of them make sense, some seem a little too conservative.

The latest is the "walls in" policy now being required for all condominiums whose master policy does not provide this coverage. Furthermore, the lender will collect it as part of the escrow payments so it has to be included as part of the borrower's debt structure.

What does this mean? It is an insurance policy, somewhat similar to a renters policy, that covers the internal rebuilding of a condo or town home if the property were to burn to the ground. Typically the HOA's insurance will rebuild the basic structure, but not finish the inside (drywall, bathrooms, kitchen).

So the down side is that a borrower who is a little tight on the mortgage payment, now has to include the insurance policy too. This could prevent them from qualifying. On the upside, it's smart to have the insurance. Let's face it, if the building was to burn down, it would be tough to come up with the money to finish the interior. So all in all, forewarned is forearmed, and with this knowledge a homebuyer can remain within their purchasing power and not have a nasty shock half way through the transaction.