First Time Homebuyers – Don’t Just Check On The Rate!

January 23, 2012 by Leave a Comment

 

Buying A House?There are tons of first time homebuyers out there negotiating the best deal on their new home, and now it’s time to get a mortgage.

Most of them only know how to ask one question:  What’s the Rate?

We’ve been in the mortgage business for over 20 years – and the only thing most people know to ask is - “What’s the Rate?” 

While that’s a great question, it’s kinda’ like going into a shoe store and asking if they have any shoes in a size 9.  Just shopping the rate is not necessarily going to get you the best price.

And what is the best price anyway!?!  Most of the clients that call us speak to my husband, Steve.  The first thing he ALWAYS says is, “hey, thanks for calling!  So you were referred to us by (insert name of friend, co-worker, agent, builder)?  That’s great!  [Read more...]

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Selling As You Separate

November 25, 2011 by Leave a Comment

swordplayLately, we’ve talked to several people who are going through a divorce – or are at least telling us that they WANT DESPERATELY to get out of a marriage.

Their real estate is holding them back.

I guess it’s not surprising that folks with money issues are also having marriage issues – but there are important details they need to consider:

  • Who is on the Deed and who is on the note?
  • Is there an escrow?  If not – who has the insurance policy?  Are the taxes current?
  • If the separation agreement calls for one spouse to “buy out” the other spouse – are they qualified to do that?

One of our recent encounters had a guy with 6 jobs in the last 2 years trying to cash out refinance so he divorcecould “buy” his wife out.  They had over $50K in credit card debt, and a house that was being reduced by 7% every month per the separation agreement.  He’s a contract employee who goes from job to job.  Granted, he has the next 5 months of contracts worked out – but he’s a contract employee.  He has mid 600 credit scores.  He has no cash reserves.  The house payment is currently 60 days past due.  His child support is $3000 a month.

“Why would you risk foreclosure as you wait for the house to be reduced to the “right” price?,” I asked.  “Why not price the house correctly the first time?” Because they can’t talk to each other.

If you are in / or considering a divorce – please be certain that you follow these basic steps to protect your credit and your assets:

  • Obtain a copy of your credit report.  Monitor it.
  • Close all joint accounts
  • Find a real estate agent to represent the sale of the property
  • Be realistic about the repairs that need to be done and the staging required.  This is the best time to clean, declutter, depersonalize and pack.
  • LISTEN to your agent.  Listen to your counsel.  BE REALISTIC so that you can have move on with your life!

Please contact us for information about refinancing your home.  Steve and Eleanor Thorne,Mortgage Loan experts in Cary, NC  919-649-5058

 

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Getting the Lowest Payment

September 19, 2011 by Leave a Comment

mip

When clients contact us  they are usually looking for the lowest monthly payment – or the easiest way to get into the property with the least amount of money tied up in the transaction.

Most prospects only ask one question… “What’s your rate???”  In truth, there are MANY other questions to ask!

One of the variables consumers should ask more about it Mortgage Insurance.  There are multiple forms of Conventional Mortgage Insurance – running from Lender Paid, to Financed to Monthly.  If you are purchasing in NC Conventional lending currrently requires PMI if you have less than 20% equity in the property.

Government loans also carry mortgage insurance.  For FHA loans this is called MIP, VA and USDA call these Guaranty Fees.  One of the major differences in GOvernment Mortgage Insurance programs and Conventional MI programs is equity investment.  With a government loan you mortgage insurance is required- no matter how much money you put into the initial transaction.

Please note that FHA allows MIP to “age off” if at least 5 years of payments are made and there’s a 78% equity position.  This is a significant program enhancement agents often forget.

If you are looking for the lowest mortgage payment in Wake County, contact Steve and Eleanor Thorne 919-649-5058. We offer the best mortgage rates available.

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Bankruptcy and VA Home Loans

April 29, 2011 by Leave a Comment

We are talking to folks every week who lost a job in the last several years, lost medical insurance – or had some other tragedy that made it necessary for them to take steps they never thought they would have to.  The reality is that in today’s economic conditions, unfortunately, bankruptcy has been the only way a family could get a fresh start. As a Veteran, considering a home purchase in North Carolina, you need to know a few things about how Bankruptcy can effect your ability to buy a home.

So, can you get a VA Guaranteed Home Loan if you have a bankruptcy?  The short answer is YES!

The good news is that as of today, the VA underwriting guidelines are far more relaxed than the guidelines for other mortgage loan types (USDA, for instance, makes you wait 3 full years before you are eligible for a mortgage).  The rules for applying for a VA Mortgage Loan after Bankruptcy are different based upon what type of Bankruptcy you took and weather you were able to KEEP your home, or if it was included in the bankruptcy.

Chapter 7 Bankruptcy

Chapter 7 bankruptcies are essentially when the borrower is freed of all liability from creditors. VA loan guidelines typically call for a 2 year waiting period after a Chapter 7 bankruptcy before you can receive VA financing again.

There are rare circumstances in which the 2 year waiting period will be reduced to 1 instead. You would have to be able to show that circumstances beyond your control were the driving force behind your financial hardship.   For instance, we’ve seen this done when a spouse died… we also had a situation where a couple had a children that were less than 12 months apart in age, and the wife could not afford childcare and had to quit her job.  If you can prove the extreme circumstance – then we might be able to make it work after the 12 month waiting period.

As mentioned earlier, USDA Home Loan guidelines call for a 3 year waiting period, and conventional loans require a 4 year waiting period.  IF you had a home that was included in the Chapter 7 Bankruptcy, and it was foreclosed upon – then VA Underwriters also require a three year waiting period.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies involve the establishment of a repayment plan instead of being cleared of liability immediately.

Veterans and military personnel can qualify for a VA mortgage loan, based upon current guidelines,  even when they are still in Chapter 13 bankruptcy. However, you will have to show that you have made a minimum of 12 payments on-time and be approved by the court trustee for the new mortgage loan.  This is VERY, VERY RARE… but again, we saw this happen with a couple who had a restaurant, field Chapter 13, they closed their restaurant and went to manage a National Chain Restaurant.  That was approved… it just takes the right circumstances.

Once you complete a Chapter 13 Bankrutpcy, VA Mortgage Loan Guidelines allow you to immediately apply for a mortgage! Yippee! Conventional Loan guidelines, for instance require a 2 year waiting period!

Don’ Forget About Your Credit Score

All of this talk about being able to qualify for a VA mortgage Loan after (or while) you have a Bankruptcy, assumes that you have a credit score that’s recovered from this event, and is high enough for the Underwriters to approve.  The Veteran’s Administration does not make these mortgage loans – they only insure them.  The VA does not have a minimum credit score that they will insure… however, Underwriters have a minimum Credit Score that they will APPROVE… and these days, that number is a MINIMUM of 620… and some underwriters will only allow loans for those Veterans with scores of at least 640.  So, even after you have finished the bankruptcy process, there are still actions you need to take to get your credit scores up and increase your likelihood of qualifying for a VA loan after bankruptcy.

For example:

  • Re-establish your credit as soon as possible if you do not have any creditors after the bankruptcy process. Remember, approving a potential borrower with no credit is almost impossible!  We NEED a credit history that’s Clean For At Least 12 Months, with 3 Tradelines! You can re-establish credit using secured credit cards, apply for credit with FingerHut, or you might be able to be added to a credit card with a family member.
  • Once you re-establish credit, be sure to always make payments on time... and be sure that the folks who are extending credit to you are reporting those payments to all three credit repositories!  If you are paying for a car over time, and making payments to the dealer – he’s probably not reporting those on time payments to the credit bureaus!  Credit Unions often will not report to all three repositories either, because each submission costs them money!
  • Get in the habit of checking your credit at a minimum of once a year. This will give you an idea of where you stand, especially when you begin shopping for a VA mortgage loan.
  • Upon the discharge of your bankruptcy, send a copy of all your discharge paperwork (including all applicable schedules) to the three credit bureaus: Equifax, Experian, and TransUnion. This is important… it’s also important to KEEP the paperwork for at least 7 years.

We do TONS of VA Mortgage Loans in NC.  We have bases at Fort Bragg, Pope Airforce Base and Camp Lejuene… plus, there are TONS of Veterans who live in Johnston County, Wake, Harnett and Pinehurst!  If you qualify for a VA mortgage loan in NC call Steve Thorne, 919-649-5058.  We have BEST Mortgage Loan Rates Available!

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What’s Up With Home Prices in Raleigh, NC

March 21, 2011 by Leave a Comment

We are fortunate, here in the Raleigh, Cary, Chapel Hill, Durham area of the Triangle because we were recently named the Number One Healthiest Real Estate Market in the Country! What does that mean? It means that we are the most likely to be OUT of the Housing Slump first.

But if you read the News and Observer, you’ll know that we are not out of the price slump yet. So, from the perspective of a long time resident, and mortgage lender, I’d like to share what we’re seeing in our local housing market from the contracts and appraisals coming across our desk.

Location has long been touted as the most important variable affecting the value of residential real estate. Recently, the S&P/Case-Shiller Home Price Indices suggested that location is still a front-runner in terms of determining valuation.

In October 2010, four cities in the 10-city composite index registered price gains from the previous year: Los Angeles (3.3 percent), San Diego (3 percent), San Francisco (2.2 percent) and Washington, D.C. (3.7 percent). I think it’s interesting to note that these cities, like the Triangle, all have a fairly high EMPLOYMENT rate. Unfortunately, in other cities around the country, like Las Vegas and Detroit, home prices continue to decline and see very high foreclosure rates along with high unemployment.

A large number of foreclosures and short sales in an area can bring the overall price of homes down. We’ve seen that in the Raleigh, Cary Real Estate market in some new home subdivisions. In those cases, it’s difficult for appraisers to find non-distressed comparable sales to support higher prices. However, if there are only a few distressed sales in an area, the distressed sales will probably not have as large an impact on the appraised value. The distressed sale will still need to be noted – but if there are other, non-distressed sales that have closed within the last six months it should more than balance out.

Location within an area can also influence home values. Some market niches in an area are doing better than others… A niche need not be a physical location. It could be a price range. For example, well-priced listings in the $400 to $500 price range in the Triangle, have been selling relatively quickly, sometimes with more than one offer. The $1 million and above price range has not been doing as well.

Proximity to jobs, Schools, and shopping is important to most buyers. Especially with gas prices going up!

Sellers in sought-after neighborhoods who put their homes on the market when there’s little for sale often get more than they anticipated. Supply and demand are up there with location in terms of impact on price. A surplus of unsold inventory gives buyers choice and a lack of a sense of urgency. In the Triangle, we have a 10 month plus supply for most price ranges – making this a buyers market.

Buyers take the condition of the property into account before they make an offer to purchase. A home with a lot of deferred maintenance might put off buyers altogether, particularly in the current market. As buyers make offers on homes that have been neglected, they will factor work that needs to be done into their price. The neglected items also get consideration in the Appraisal and Inspection. If the buyer is using USDA or FHA as their financing vehicle – it’s likely that the items listed on the reports will all need to be repaired… not just negotiated in the price.

Maintenance items can be corrected… however that’s not the case with Incurable defects. One of the main reasons that buyers need a Realtor in this market is to make them aware of Incurable defects which can be a huge problem when you go to sell the property. An incurable defect, like being located next to a highway or on a busy street, is something that can’t be corrected. You’ll have to live with it.

In a hot market, buyers often overlook these defects because prices are rising and buyers are more willing to make compromises. In a slow market, with no urgency to buy immediately, buyers are pickier. They take their time and buy when they find the right house.

If you are looking for a home in the Triangle, Raleigh, Cary, Apex or Holly Springs – please call Steve Thorne 919-649-5058. We have years of experience working with NC Buyers and know the mortgage process inside and out. We offer the best mortgage rates available for all programs – including Conventional first and second mortgages.

 

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Fannie and Freddie Fees Drive Mortgage Rates Higher 2011

January 17, 2011 by Leave a Comment

Mortgage Giants Fannie Mae and Freddie Mac announced that they are expecting more revenue from mortgage loan production in 2011 to cover their costs. Where is that money coming from? The 2011 Consumer.  The additional fees they will begin charging in April are marked as Risk Based, however they will affect ALL borrowers – no matter what the downpayment or credit scores are.

In a Dec. 23 memo to lenders in its network, Fannie announced that it had decided to impose a new schedule of higher add-on fees, similar to what Freddie Mac — the other huge congressionally chartered mortgage investor — rolled out to jeers from the real estate industry just before Thanksgiving.

The new fees come as no surprise, I guess considering that each month the taxpayers are dumping billions of dollars into the Agencies to keep them afloat.  Even though the Congress made enormous changes with the Dodd Frank Banking and Consumer Protection laws last summer, Fannie and Freddie were left out of the legislation.  Later this month, the Obama administration plans to submit long-promised proposals to Congress on what to do with the two — phase them out, restructure them, privatize one or both of them…  or maybe they will come up with some other out of the box solution.

It’s important to remember that Fannie and Freddie still have their hand in over 2/3 of ALL new mortgage lending done in the United States.

The new fees scheduled to start this spring,  don’t appear likely to make financing a home any easier. Some potential buyers who have high credit scores and hefty down payments may be surprised that even they are being targeted for higher “risk-based” fees.

Consider these examples of how Fannie’s revised list of loan add-ons will affect borrowers:

$300,000 mortgage, above 800 Middle Credit Score, cash down payment of just less than 25%

With the changes in April you will be hit with a $750 fee equal to 1/4% of the loan that we don’t currently charge.

$300,000 mortgage loan, credit score of 679, down payment less than 20%

Fannie will soon begin hitting you up for 2.75% in add-on fees — a staggering $8,250 solely attributable to your FICO and LTV ratio.

That’s $1,500 more than what you are currently being charged.

But these fees are just the start of the multilayered, cumulative risk-based pricing system that both Fannie and Freddie employ. Every perceived risk factor in a loan transaction receives its own separate add-on fee, all of which get totaled up for your final loan charges.

We’ve been telling folks to lock into a mortgage loan NOW… and we still think this is the BEST advice we can give you!

If you, your family or your friends are considering a mortgage loan for a home purchase or a refinance – please call Steve and Eleanor Thorne, 919-649-5058

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Fed Mandates, QEII and Mortgage Interest Rates in NC

January 16, 2011 by Leave a Comment

Following a sharp rise in interest rates from mid-November through December, Freddie Mac is now predicting that interest rates on 30-year fixed-rate mortgages will hit 5.5 percent in the fourth quarter of the year, up half a percentage point from the 5.0 percent forecast last month.

The little green mark is approximately where the FED would like to see mortgage interest rates at the end of the year… which is lower than the Freddie Mac Forecast.

Why is the Fed Target LOWER than the Freddie Mac Forecast?  Because the FED (and most Economist) realize that the Housing Market is an important part of the overall health of the Economy. 2011 is expected to be the year that we see the MOST bank foreclosed properties hitting the local real estate markets, obviously creating even more supply and likely driving prices (Values) down in many areas.

QE II and Federal Reserve Mandates

Again… the Fed knows that Mortgage Interest rates in the upper 3′s lower 4′s brought much more interested buyers into the market. So why are mortgage interest rates headed to 5.5%?

The Fed has two mandates: keeping prices stable and creating an economic climate for low unemployment.   Prior to taking his current job, in one of his published papers, Ben Bernanke made the case for the Fed to target a specific inflation number, and the number that came to be accepted as his target was 2%.

In his famous helicopter speech in late 2002, he assured us that inflation could not happen “here,” even if the short-term rate was zero, because the Fed would move out the yield curve by buying large amounts of medium-term bonds. This would have the effect of lowering yields all along the upper edge of the curve. This became known as quantitative easing (as a reminder, Mortgages are sold as Mortgage Backed Security BONDS – and the government is suppose to be the LARGEST PURCHASER of mortgages).

In Jackson Hole last summer, Fed Chairman Bernanke, pleased with the effect of the first round of Fed Buying (QE I) announced the second round of liquidity-injecting quantitative easing (QE2). In that speech, in later speeches in the fall, and in op-ed pieces he said that such a program would lower rates.

Then a funny thing happened on the way to QE2:  long-term rates began to rise all over the developed world. As Yogi Berra noted, “In theory, there is no difference between theory and practice. In practice, there is.” It’s got to be driving Fed types nuts to see the theory of QE, so lovingly advanced and believed in by so many economists, be relegated to the trash heap, along with so many other economic theories (like that of efficient markets). The market has a way of doing that.

So, in an interview on CNBC with Steve Liesman last week Bernanke was asked about one minute into the clip (link ) about the little snafu that, following QE2, both interest rates and commodity prices have risen. How can that be a success? Ben’s answer (paraphrased):

“We have seen the stock market go up and the small-cap stock indexes go up even more.”

Really? Is this the third mandate of the Fed?  Foster a rising stock market?

I wonder what the Fed’s target for the S&P is for the end of the year? That would be an interesting bit of information. Are we going to target other asset classes – because clearly targeting long term mortgage interest rates hasn’t worked!

Understand, I am not against a rising stock market… but the Stock Market should not be the Fed’s FOCUS.!  It’s certainly not a reason to add $600 billion to the balance sheet of the Fed when we clearly do not understand the consequences.

“If it looks like they’re making up the rules as they go along, it’s because they are.”

Bottomline For Mortgage Interest Rates in NC for 2011

Because the FED policy has been largely ineffective, and because Freddie Mac and Fannie Mae will be adding risk level fees to mortgage rates starting in April… we believe that there’s more room for mortgage rates to rise than fall.  We are telling clients to lock into a mortgage rate now.

When rates do start to rise, we expect that they’ll rise quickly. There is lots of concern about ARM (adjustable-rate mortgage) resets.  Fortunately, most of the ARMs adjusting in 2011 are tied to LIBOR.  This will likely result in LOWER payments for homeowners with this type of ARM – at least until the next adjustment.

The other concern is that mortgage guidelines in North Carolina will continue to get tighter.  It will be harder to be approved in 2011.  With new Federal Consumer Protection laws, there’s extra scrutiny by banks. The minimum requirements, including credit score and Credit HISTORY are higher,  the documentation and verifications for self-employed borrowers is tougher, and that decreases the buyer pool.

If you are considering a purchase in Raleigh or Cary, NC – or you want information about mortgage interest rates in NC, please call Steve and Eleanor Thorne 919-649-5058.

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Mortgage Interest Rates are HIGHER!

December 8, 2010 by Leave a Comment

Mortgage Interest Rates have gotten higher, not lower as the Fed said it was hoping would happen with this latest round of activity.

So, when you look at the Mortgage Banker’s of America’s (MBA) refinance index (looks at refinance activity on a month over month basis) and the the 30 year fixed rate mortgage interest rate that’s printed each week from the Freddie Mac Primary Mortgage Market Survey®… the following release of information from the MBA is not surprising.

The Refinance Index decreased 1.4 percent from the previous week. This is the fourth weekly decrease for the Refinance Index which reached its lowest level since June 2010.

December mortgage rates are currently hovering for a 30 year fixed mortgage at above 4.75% APR. Although mortgage rates haven’t risen very far – and are still below 5% – it takes lower and lower rates to get people to refi (at least lower than recent purchase rates).

With 30 year mortgage rates now about 0.75% above the lows in October, this is the end of the recent surge in refinance activity – unless rates drop sharply again.  It also seems unlikey to “excite” any buyers out there looking for a bargain.

The Fed Stated Policy is for mortgage Interest rates to be LOW with the QEII policy… we’re waiting… and waiting… for that to happen.  When and IF rates head lower – I’m hoping buyers realize this could be the last opportunity they get!

If you have questions about mortgage interest rates, and qualifying for a mortgage in NC, please call Steve and Eleanor Thorne, NC Mortgage Loan Experts 919-649-5058.  We have the best mortgage rates available.

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Profile of 2009 – 2010 First Time Home Buyer

November 9, 2010 by Leave a Comment

The National Association of Realtors released information about First Time Home Buyers last week that showed some interesting trends!

  • 93 percent of those surveyed in 2009 – 2010 reported that they purchased using one of the first-time buyer tax credits. (Who’s surprised??? Nope, we’re not surprised either!)
  • Ninety-five percent chose a fixed-rate mortgage.
  • The median age of first-time buyers was 30 and the median income was $59,900. (This part was a little surprising!) The typical first-time buyer purchased a 1,540 square foot home costing $152,000 (bet they were keeping their total payments under the $1000 mark)
  • First-time buyers who made a downpayment used a variety of sources: 74 percent used savings, 38 percent received a gift (or a loan) from a friend or relative, (READ:  their parents) Eight percent tapped into a 401(k) fund, and 6 percent sold stocks or bonds.
  • Women accounted for 1 in 5 purchases, and single Males made the largest leap in the survey ever – which was attributed to the tax [Read more...]

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More People Refinance to 15 Year Mortgage

September 29, 2010 by 1 Comment

With mortgage interest rates being in the low 4′s for a 30 year rate, more people are considering refinancing.  A larger than expected number of those folks are asking for 15 year mortgage. This week, the rates offered by lenders on 15-year fixed-rate loans averaged 3.82 percent, Freddie Mac reported.

Why is that?  Well the customers we talk to tell us that they are not getting much of a return on their other investments… and they don’t see Social Security payments as a way to make their mortgage payments!

Baby boomers nearing retirement, who may recall 13 and 14 percent mortgage rates when inflation peaked in the early 1980s, are especially drawn to the 15-year loans!

According to Freddie Mac, 22 percent of homeowners who refinanced their mortgages in the second quarter lowered their principal balance by paying cash at the closing. That was up from 19 percent in the first quarter, and was the third-highest “cash-in” level since Freddie Mac began tracking it in 1985.  Many of those types of statistics are coming from areas where people have Equity Lines and with the Equity Line, they don’t qualify to refinance.

Fortunately for those of us in the Raleigh / Cary market, we don’t really have the home appraisal problems many of our friends in the rest of the country have! Raleigh/Cary was recently named the top area to experience APPRECIATING values in the next year.

If you are considering a Refinance of your mortgage loan, please call Steve and Eleanor Thorne, 919-649-5058 Professional Mortgage Planners in North Carolina.  We offer the best mortgage rates and the lowest fees available.

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