Archive for April, 2010

Lifespan of Negative Credit

by Justin Miller on April 30, 2010 in Credit with No comments

Here is another article with great information about credit reports. 

Negative information is deleted seven years from the original delinquency date. Collection agencies are required to report the original delinquency date from the original account.

The original account and the collection account will be deleted at the same time. The original delinquency date does not change when the account is sold from one collection agency to another, according to Experian’s public education director, Rod Griffin, so the time does not start over each time the debt is transferred.

http://www.marketwatch.com/story/lifespan-of-negative-information-on-credit-reports-2010-04-30?siteid=rss&rss=1 

Homebuyers Don’t Adequately Research Mortgages

by Justin Miller on April 30, 2010 in Mortgage Education 101 with No comments

Again, I have been saying this for months now and finally I am not alone.  This is very scary.  The survey — conducted on more than 2,700 adults by market research firm Harris Interactive — found that 31% of Americans spend less than two hours researching their home loan. Two hours represents the average amount of time spent researching a vacation or computer purchase, or half the amount of time spent researching a new car, Zillow said.

I think people might get confused when they read this and think it is all about shopping for a mortgage.  I heard a saying once, “you shop for shoes, you shop for clothes, but when you shop for a mortgage you end up with the biggest liar.” 

In the manual I am reading for the National Mortgage Licensing System there is a paragraph that reads “Another major challenge has been rates, and the fact that people shop on them, not realizing the value of working with a competent professional.  You wouldn’t go to Wal-mart’s medical center to cure your cancer, so why would you go to the low-cost lender to handle the most important financial decision of your entire life?  Still, people shopped around for the “lowest rates,” most of the time not even realizing how rates are constructed and advertised.”

The reason you need to do research in my opinion is so you know what the exact costs are, what’s involved in the process, what documentation you have to provide, how much can you be pre-qualified, and most important being what monthly payment are you comfortable with.  We need to educate our borrowers and let them know being pre-qualified for a payment isn’t the same as being able to afford it.  You can still qualify for more than you can afford. 

This isn’t done an hour before you go out and look at homes or after a full day of driving around with your real estate agent.  I am not trying to offend anyone or tell someone how to do business.  It’s none of my business if you want to put a borrower in your car and spend money on gas and lose a whole day.  I care about the buyer who just fell in love with a home and now finds out that they cannot afford to buy it.  I’m the one who has to tell them this.  I find that to be unfair.  We need to educate them.  I feel that this in turn would create more business for you but then again what do I know. 

http://www.housingwire.com/2010/04/29/in-shopping-mortgage-borrower-mentality-unchanged-since-2008-zillow/?utm_source=rss&utm_medium=rss&utm_campaign=in-shopping-mortgage-borrower-mentality-unchanged-since-2008-zillow 

Right To Rent Bill

by Justin Miller on April 30, 2010 in Foreclosure, Loan Modification, Short Sales with No comments

This is just a proposal but it’s a bill filed in the US House of Representatives would allow mortgage borrowers to remain in their homes, as renters, for up to five years after receiving a foreclosure notice.

I guess it’s not a bad idea if the borrower who is not making their mortgage payments decides to make their rent payments.   It would create cash flow for the bank and allow home values to regain some value assuming that the market does stabilize. 

There are stipulations in order to qualify for this.  Yep, always a catch and you always need to read the fine print.  The right to rent program would be limited to homes purchased at or below the median price for its metropolitan statistical area, and must have been the borrower’s principal residence for no less than 2 years. Only mortgages originated before July 1, 2007 will be eligible.

http://www.housingwire.com/2010/04/29/house-democrats-introduce-right-to-rent-bill-for-borrowers-facing-foreclosure/?utm_source=rss&utm_medium=rss&utm_campaign=house-democrats-introduce-right-to-rent-bill-for-borrowers-facing-foreclosure 

Homebuyer Tax Credit Alternatives

by Justin Miller on April 30, 2010 in General News with No comments

It expires tomorrow but that doesn’t mean no one else hasn’t come up with creative ideas.  Fannie Mae has extended their 3.5% credit but it is only available on Fannie Mae owned properties and they can be found at www.homepath.com.  “This program gives buyers back 3.5 percent of the final sales price to be used toward closing cost assistance or their choice of selected appliances.”

Coldwell Banker came up with their own idea too.  Although it appears that the seller has to agree to pay the 3% up to $8,000 towards the buyers closing costs it has been affective seeing as the media has picked it up and it is getting free publicity. 

… on May 1, 2010, immediately following the expiration of this government initiative, home sellers participating in the Coldwell Banker Buyer Bonus Sales Event will offer a credit of 3 percent (up to $8,000), when part of an accepted offer,  of their home’s purchase price to buyers who sign a contract before July 31, 2010.  There is no deadline for a closing date.

http://www.cnbc.com//id/36825206 

Fed To Keep Fed Funds Rate Low

by Justin Miller on April 29, 2010 in Economic News, Interest Rates, Mortgage Education 101 with No comments

The headlines about the Fed keeping rates low can be very confusing and misleading.  They are not talking about mortgage rates.  They are talking about the Federal Funds rate which is the rate at which banks lend money to each other overnight. 

Now this can affect mortgage rates indirectly because if they are raising the Fed Funds rate it could be because of inflationary worries and an improving economy both of which are bad for mortgage rates. 

It’s so funny when I talk to people about rates and they say “yeah interest rates are going to go up because the Fed stopped buying mortgage-backed securities” when they most likely have never heard of what mortgage-backed securities nor do they understand it.  It reminds me of that scene in Good Will Hunting when Matt Damon confronts that guy in the bar that just recites paragraphs verbatim from a text book. 

Don’t get me wrong, there is nothing wrong with never hearing about mortgage-backed securities because there was obviously one point in my career that I didn’t know what they were either but don’t comment on something because you heard someone in the media saying.  Comment on it because you spoke to a professional who knows about it and explained to you what it means and what could happen.  There is nothing wrong with having an opinion but make sure it’s your own opinion and not someone else’s.  It could bite you in the butt. 

http://online.wsj.com/article/SB20001424052748704423504575212310478936880.html?mod=djemITP_h 

Proposed Plan For Distressed Borrowers In Florida

by Justin Miller on April 27, 2010 in Foreclosure, Loan Modification, Short Sales with No comments

I’m not going to hold my breath but here is what they are saying on Florida. 

Florida, which would receive $418 million, proposed using the majority of its allocation toward making mortgage payments for up to nine months for up to 12,000 unemployed borrowers. It also would commit $40 million toward providing up to $15,000 in down payments for 4,000 prospective home buyers.

http://online.wsj.com/article/SB20001424052748704464704575208390699479772.html?mod=djemITP_h

5 Steps To Buying Your First Home – Tax Credit or Not

by Justin Miller on April 27, 2010 in Mortgage Education 101 with No comments

This is a good article from the USA Today.  Again, I think the most important step is to “Get Your Financials In Order.”  You need to be prepared for this large purchase.  I know I am now a broken record but this is so important.  We need to educate ourselves and not make an impulse purchase.  This isn’t clothing or a car, it’s a home. 

http://www.usatoday.com/money/economy/housing/2010-04-25-first-time-home-buyers_N.htm?csp=usat.me 

Jumbo Mortgage Rates Have Improved

by Justin Miller on April 26, 2010 in Interest Rates, Jumbo Mortgages with No comments

This article is a little late which then I guess makes me a little late for only writing about it now but interest rates on Jumbo mortgages have improved.  For those of you who might not know what is classified as a jumbo mortgage, it will all depend on what county and state you are in but typically it is any loan amount above $417,000.  In Broward, Miami-Dade, and Palm Beach counties it is temporarily at $423,750.  In Monroe County you can go as high as $723,750. 

To look up your county you can go to https://entp.hud.gov/idapp/html/hicostlook.cfm. 

http://www.marketwatch.com/story/jumbo-mortgages-making-a-comeback-2010-04-26?siteid=rss&rss=1

Mortgage Fraud

by Justin Miller on April 26, 2010 in General News with No comments

Many don’t understand the amount of documentation that is required to get a loan right now and it has been causing even more frustration in an already frustrating business here in South Florida.  Maybe seeing that Florida took the #1 spot will help borrowers understand a little better. 

Ranked No. 1 in 2006 and 2007, Florida moved back into first place in 2009 with close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume.

According to a supplement to the MARI report, Florida also has the five projected weakest real estate markets in the country, including Port St. Lucie/Fort Pierce, Orlando/Kissimmee, Naples/Marco Island, Palm Bay/Melbourne/ Titusville, and Deltona/Daytona Beach/Ormond Beach. http://www.cnbc.com//id/36776621?slide=11 

You may be honest but we don’t know that and the one’s who did commit fraud were thought to have been honest too.  Sorry, I don’t like how much documentation I have to request either.  Remember, as a buyer you only have to do it on your loan.  I have to go through this on every loan.  It’s not fun for me either but it will get better. 

I would rather have to go through this then have bought a home during the boom years and have lost 50% of my value.  Look at the glass as half full especially if you got an interest rate in the 5%’s and an $8,000 tax credit.  You tell me what documentation you need me to get for a free $8,000 and I will do it. 

http://www.msnbc.msn.com/id/36783245/ns/business-real_estate/ 

How Remodeling Is Changing

by Justin Miller on April 24, 2010 in General News with No comments

I don’t have a lot to write on this because I can barely change a light bulb but I found some helpful items in it.  Also, at the bottom of the article it has a neat chart with remodeling during the boom years versus now. 

One of the most cost-effective improvements, say contractors, is removing a wall to create an open kitchen-dining area. The project “makes the kitchen feel bigger and the kitchen and dining room more usable,” says Sarah Susanka, an architect and author of “The Not So Big House” book series. “It’s such a simple thing to do.” It can cost as little as a couple of thousand dollars, according to David Merrick, a home remodeler in Kensington, Md., but can run much higher if plumbing and electrical work are involved.

Web sites such as Remodelormove.com offer calculators to help consumers make the decision.

http://online.wsj.com/article/SB10001424052748703404004575198603552079406.html#mod=todays_us_money_and_investing 

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