The last 2-3 weeks has been crazy in the mortgage industry. Not with the usual type stuff but with preparing for a change in the law of how mortgage companies quote interest rates and how mortgage loan officers get paid. That's right now the government is regulating how you get your interest rate and how we get paid. Hmmm is that considered Socialism?
Bottom line is that lenders have been busy trying to calculate if the actual ruling would take affect and how to put it in play and on April 6 it was in play.
This is one of the things that I had mentioned would lead to higher borrowing costs for borrowers because of what lenders needed to do to now safeguard themselves. Rates are still awesome so it is not as big a deal now but as rates creep up....it will matter.
One exciting thing is that I published my first editorial for an online newspaper on mortgages. Looks like I am going to be doing this periodically and am excited for the opportunity.
Right now the big thing is that we are starting to enter our Spring market and with rates where they are at and home prices where they are at....why aren't you out buying a house?
I realize that if you are a move up borrower equity may be an issue but if you are a first time buyer.....get out there.
Keeping it simple this week as I get back to this...Have a good weekend!
Friday, April 8, 2011
Tuesday, March 15, 2011
Homes to get more Expensive April 1....No Fooling
As April 1 approaches I have to think to myself how many will get priced out of buying that dream home. Don't get me wrong, rates will still be good and home prices low but 2 major factors will be happening that will drive the cost of borrowing money and owning a home up.
First off Fannie Mae and Freddie Mac are making adjustments to their risk based pricing. What that means is that the adjustments to interest rates will go up for various items. Typically these will include type of loan, loan to value, credit score, combined loan to value, type or property and a few other items. These adjustments will affect the interest rate a particular consumer will be able to receive.
Shortly after this FHA will be following suit in raising their costs but will be doing it via their mortgage insurance premiums which will affect your payment and home affordability.
Second is that the Dodd-Frank Act is going to start coming in to full swing. This was passed to keep financial institutions in check. April 1 is when the portion of the act that affects how lenders and loan offers can be compensated comes in to effect. This could potentially affect borrowing costs either in actual costs paid or the interest rate paid. Lenders have had some time to figure this all out but the clarity of the act is vague and the FED is not even sure what part of it means.
Now all of these can and could affect your affordability but you need to remember that rates are still low and home prices are as well. So it still has not been a better time to buy a home. First time buyers especially can buy more home then they dreamed of a few years ago and they need to get out there and buy. Move up buyers can buy that "mansion" they always wanted and of course 2nd homes and investment properties have no where to go in value but up if you buy now.
Make sure to let me know if you have any questions or comments and have yourself a great week.
First off Fannie Mae and Freddie Mac are making adjustments to their risk based pricing. What that means is that the adjustments to interest rates will go up for various items. Typically these will include type of loan, loan to value, credit score, combined loan to value, type or property and a few other items. These adjustments will affect the interest rate a particular consumer will be able to receive.
Shortly after this FHA will be following suit in raising their costs but will be doing it via their mortgage insurance premiums which will affect your payment and home affordability.
Second is that the Dodd-Frank Act is going to start coming in to full swing. This was passed to keep financial institutions in check. April 1 is when the portion of the act that affects how lenders and loan offers can be compensated comes in to effect. This could potentially affect borrowing costs either in actual costs paid or the interest rate paid. Lenders have had some time to figure this all out but the clarity of the act is vague and the FED is not even sure what part of it means.
Now all of these can and could affect your affordability but you need to remember that rates are still low and home prices are as well. So it still has not been a better time to buy a home. First time buyers especially can buy more home then they dreamed of a few years ago and they need to get out there and buy. Move up buyers can buy that "mansion" they always wanted and of course 2nd homes and investment properties have no where to go in value but up if you buy now.
Make sure to let me know if you have any questions or comments and have yourself a great week.
Monday, March 7, 2011
3rd Party Performers and the state of Mortgages
As previously mentioned on the last post I would talk a little about the appraisal and the title company.
First off on the appraisal all it does it gives you and the lender an idea of market value. The appraiser is to pull other properties that are similar in the market and that have recently sold and compare them to your home. Room count, square footage and home type are the 3 main things that are looked at. Then they compare things like decks, fireplace and market appeal. Obviously the process is more complex then this but this is the basics. When they are done making the comparison they come up with a value on your home. With a purchase it almost always comes in at the sales price. However with an appraisal and in this present market we are having tough times getting homes to appraise for what will help the financing work.
One major important thing is that the appraiser does not warrant the condition of the property...only the value.
Another 3rd party vendor as previously mentioned it the title company. The title company has an interesting job as they are warranting that the title work is free and clear. A title on a house is much like that of a car, but a lot longer as it entails the recorded history of real estate transactions for this property/home.
The title company has a few things that it needs to check out. The first is that they make sure that all of the recordings are correct so that there may not be another person out there claiming to have ownership. They check for liens and judgments against the property as well as potential easements and encroachments. It is their job to help correct any errors to protect you and the lender.
An encroachment is when part of your house/property or the neighboring property encroaches on the other. What this means is that somehow you are extended in to the next parcel of land. his could be because of a variety of reasons and is usually easily corrected.
A common easement is like when their is a utility running through your yard that is for major use. What this means is that you need to allow access to the company/person that has the recorded easement so that they can access it.
There are other scenarios that can pop up with title work but those are the 2 most common. Most people refer to title insurance as "peace of mind" insurance. It protects you against faulty title which is important. If the title company makes a mistake it is up to them to correct it for you or to take care of any issues due to financial loss based on their error.
Now there is a lot more that I have not covered on these items but having and idea or overview is always helpful to have. Any questions on this ....ask and I will answer.
The mortgage industry is in a huge state of flux right now. Part of it is that that it is waiting to see what will or will not happen with April 1 and compensation of loan officers. Right now large banks will be looking to make more money on each loan then they did before. How the heck is that good for consumers? What is hard is that the people that are attempting to create and enforce all of these new regulations do not really understand the business at hand. They think that they are doing all these good things when all they are doing is making things worse and hurting the consumer.
Whats next, regulating what a sales person selling suits can make or telling them how they can be paid?
The main idiots that messed things up are gone. With all of the new requirements for lenders as it pertains to NMLS there are many that could not be in the business and many that opted out of doing what was needed.
The industry itself has done a good job of cleaning things up and really does not need help from Mr. Dodd or Mr. Frank.
Rates are continuing to stay strong and getting a mortgage is still Simple-Fast and Hassle Free.
That's it for today and make sure to follow me either on facebook at http://www.facebook.com/pages/Toms-Wisdom-for-Mortgages-and-other-things/101866693225282
or on twitter @omsiguy.
Have a great week!
First off on the appraisal all it does it gives you and the lender an idea of market value. The appraiser is to pull other properties that are similar in the market and that have recently sold and compare them to your home. Room count, square footage and home type are the 3 main things that are looked at. Then they compare things like decks, fireplace and market appeal. Obviously the process is more complex then this but this is the basics. When they are done making the comparison they come up with a value on your home. With a purchase it almost always comes in at the sales price. However with an appraisal and in this present market we are having tough times getting homes to appraise for what will help the financing work.
One major important thing is that the appraiser does not warrant the condition of the property...only the value.
Another 3rd party vendor as previously mentioned it the title company. The title company has an interesting job as they are warranting that the title work is free and clear. A title on a house is much like that of a car, but a lot longer as it entails the recorded history of real estate transactions for this property/home.
The title company has a few things that it needs to check out. The first is that they make sure that all of the recordings are correct so that there may not be another person out there claiming to have ownership. They check for liens and judgments against the property as well as potential easements and encroachments. It is their job to help correct any errors to protect you and the lender.
An encroachment is when part of your house/property or the neighboring property encroaches on the other. What this means is that somehow you are extended in to the next parcel of land. his could be because of a variety of reasons and is usually easily corrected.
A common easement is like when their is a utility running through your yard that is for major use. What this means is that you need to allow access to the company/person that has the recorded easement so that they can access it.
There are other scenarios that can pop up with title work but those are the 2 most common. Most people refer to title insurance as "peace of mind" insurance. It protects you against faulty title which is important. If the title company makes a mistake it is up to them to correct it for you or to take care of any issues due to financial loss based on their error.
Now there is a lot more that I have not covered on these items but having and idea or overview is always helpful to have. Any questions on this ....ask and I will answer.
The mortgage industry is in a huge state of flux right now. Part of it is that that it is waiting to see what will or will not happen with April 1 and compensation of loan officers. Right now large banks will be looking to make more money on each loan then they did before. How the heck is that good for consumers? What is hard is that the people that are attempting to create and enforce all of these new regulations do not really understand the business at hand. They think that they are doing all these good things when all they are doing is making things worse and hurting the consumer.
Whats next, regulating what a sales person selling suits can make or telling them how they can be paid?
The main idiots that messed things up are gone. With all of the new requirements for lenders as it pertains to NMLS there are many that could not be in the business and many that opted out of doing what was needed.
The industry itself has done a good job of cleaning things up and really does not need help from Mr. Dodd or Mr. Frank.
Rates are continuing to stay strong and getting a mortgage is still Simple-Fast and Hassle Free.
That's it for today and make sure to follow me either on facebook at http://www.facebook.com/pages/Toms-Wisdom-for-Mortgages-and-other-things/101866693225282
or on twitter @omsiguy.
Have a great week!
Wednesday, March 2, 2011
Bouncey, Bouncey, Bouncey.....Rates....8
Interest rates and the bond market continue their never ending of bouncing around. Economists are all split on which they that they are headed but as long as employment is poor and gas prices continue to increase we will see consumers take more steps to the back of the line. If this is the case then we should say rates take another drop....perhaps a big one at that. Maybe Charlie Sheen has something to say on this?
You are in the home stretch on your home loan at this point. If you have a purchase you have a lot of people working for you to insure that you get to the closing table and have a smooth and successful closing.
The title company is busy making sure that the title work is clear and that there are no issues with easements or encroachments on the property as well as making sure all title transfers have been done successfully.
Your realtor is busy making sure that if the seller was to take care of anything prior to close..that it is being done and keeping you in the loop on this. They most likely are arranging a walk through for you prior to closing. This is especially important if the seller was to correct anything in the home or if your home is a new construction purchase.
And your lender is making sure that the approval is done and clean and that all parts match up successfully like the title and the appraisal.
If this were to be a refinance then you are working directly with just the lender and their game plan is still the same as it would be for a purchase.
Closing day arrives and the room is crowded on a purchase. Typically you will have the closers there for the buyer and seller (unless it is the same company) and the listing and selling agent (unless they are the same) along with the sellers and the buyers. In many cases your mortgage lender will be there as well to answer any questions that you may have in regards to the loan documents. The closing takes anywhere from 45 minutes to an hour and a half dependent on how many people are there, how many signatures are needed and how many questions are asked. A refinance closing normally should take about a half hour.
The title company closers go through all the paperwork with both sides and explain each document and collect your signatures. When the closing is complete....the money gets handed around. If the buyer needs money at closing they typically bring in a cashiers check made out to themselves and they sign it over to the title company. If the check is too much the title company cuts a check back to the consumer.
Now obviously this day is a little more complex then this but between the realtor(s)/title company and lender they should be making it a day that is Simple-Fast and Hassle Free.
More to come about the appriasal and the title company.
Have a great week!
You are in the home stretch on your home loan at this point. If you have a purchase you have a lot of people working for you to insure that you get to the closing table and have a smooth and successful closing.
The title company is busy making sure that the title work is clear and that there are no issues with easements or encroachments on the property as well as making sure all title transfers have been done successfully.
Your realtor is busy making sure that if the seller was to take care of anything prior to close..that it is being done and keeping you in the loop on this. They most likely are arranging a walk through for you prior to closing. This is especially important if the seller was to correct anything in the home or if your home is a new construction purchase.
And your lender is making sure that the approval is done and clean and that all parts match up successfully like the title and the appraisal.
If this were to be a refinance then you are working directly with just the lender and their game plan is still the same as it would be for a purchase.
Closing day arrives and the room is crowded on a purchase. Typically you will have the closers there for the buyer and seller (unless it is the same company) and the listing and selling agent (unless they are the same) along with the sellers and the buyers. In many cases your mortgage lender will be there as well to answer any questions that you may have in regards to the loan documents. The closing takes anywhere from 45 minutes to an hour and a half dependent on how many people are there, how many signatures are needed and how many questions are asked. A refinance closing normally should take about a half hour.
The title company closers go through all the paperwork with both sides and explain each document and collect your signatures. When the closing is complete....the money gets handed around. If the buyer needs money at closing they typically bring in a cashiers check made out to themselves and they sign it over to the title company. If the check is too much the title company cuts a check back to the consumer.
Now obviously this day is a little more complex then this but between the realtor(s)/title company and lender they should be making it a day that is Simple-Fast and Hassle Free.
More to come about the appriasal and the title company.
Have a great week!
Friday, February 25, 2011
Home Buying...Part 7...almost there.....
The week ran away from me and I spent 15 minutes trying to remember my password today....
The markets have been friendly to interest rates this week and the trend looks like it should continue. This should help to spring some life in to the SPRING market. Unfortunately as rates come down...gas prices are going up.
Well it is time to get the realtor's to work for and with you. Meet with them and go over what it is you are looking for in a house and let them know what price range you have been pre-approved for. With this information the realtor can start searching for homes based on your constraints. As hoes are found the realtor will set up showings and go with you to them to look at the property.
Once you have a property that you want to buy you will draft a purchase agreement with the realtor. The realtor may suggest a price to offer on the home but you can offer anything that you want and the realtor has an obligation to present it. When you present an offer you will need to put down what they call earnest money. This is usually an amount ranging from $500-$2000 for most homes. This is money that is deposited into an account with the real estate company until closing and it counted towards your down payment. Simply put this is money that is for "good intentions" of buying the home. If for some reason your loan ended up being denied you would get this money back.
When you present an offer on the home you will typically negotiate or counter. What this means is that you may offer one thing and the seller may come back with something different and you may go back and forth. Typical items that are countered are the price of the home, seller paid costs and closing dates.
Once an offer is accepted your realtor will provide the lender with a copy of the purchase agreement. At that time the lender will review the information and discuss interest rates and locking in with you. They will also collect for the appraisal and get that completed as well as ordering the title work.
The title company is also your right to choose. But typically the listing agent of the house you are buying will like to use their company. This is not unusual but you do ave the right to shop for the best deal on this and pick the company that you want. Your lender may even have some suggestions on this.
One thing that you may be doing right after you have your offer accepted; and is highly suggested, is to have a home inspection done on the home. This is different then the appraisal. The appraisal does look for some defects and such but is primarily based on value and an appraiser does not warrant the working condition of a home. The home inspection is very complete and everything is checked. What is nice about this is that you may find something wrong with the house and get the seller to take care of it. A purchase agreement is always contingent on you getting your financing and a home inspection so if it is not good, you have an out.
Well you are now in the home stretch of the process.....and headed for closing....what all happens? we will go over that in our next blog.
I have started following a person that I know that does life coaching and she has some good stuff that she puts out.....so remember that if you wait for the screams you will miss the whispers.
Have and awesome weekend and bring on March!
The markets have been friendly to interest rates this week and the trend looks like it should continue. This should help to spring some life in to the SPRING market. Unfortunately as rates come down...gas prices are going up.
Well it is time to get the realtor's to work for and with you. Meet with them and go over what it is you are looking for in a house and let them know what price range you have been pre-approved for. With this information the realtor can start searching for homes based on your constraints. As hoes are found the realtor will set up showings and go with you to them to look at the property.
Once you have a property that you want to buy you will draft a purchase agreement with the realtor. The realtor may suggest a price to offer on the home but you can offer anything that you want and the realtor has an obligation to present it. When you present an offer you will need to put down what they call earnest money. This is usually an amount ranging from $500-$2000 for most homes. This is money that is deposited into an account with the real estate company until closing and it counted towards your down payment. Simply put this is money that is for "good intentions" of buying the home. If for some reason your loan ended up being denied you would get this money back.
When you present an offer on the home you will typically negotiate or counter. What this means is that you may offer one thing and the seller may come back with something different and you may go back and forth. Typical items that are countered are the price of the home, seller paid costs and closing dates.
Once an offer is accepted your realtor will provide the lender with a copy of the purchase agreement. At that time the lender will review the information and discuss interest rates and locking in with you. They will also collect for the appraisal and get that completed as well as ordering the title work.
The title company is also your right to choose. But typically the listing agent of the house you are buying will like to use their company. This is not unusual but you do ave the right to shop for the best deal on this and pick the company that you want. Your lender may even have some suggestions on this.
One thing that you may be doing right after you have your offer accepted; and is highly suggested, is to have a home inspection done on the home. This is different then the appraisal. The appraisal does look for some defects and such but is primarily based on value and an appraiser does not warrant the working condition of a home. The home inspection is very complete and everything is checked. What is nice about this is that you may find something wrong with the house and get the seller to take care of it. A purchase agreement is always contingent on you getting your financing and a home inspection so if it is not good, you have an out.
Well you are now in the home stretch of the process.....and headed for closing....what all happens? we will go over that in our next blog.
I have started following a person that I know that does life coaching and she has some good stuff that she puts out.....so remember that if you wait for the screams you will miss the whispers.
Have and awesome weekend and bring on March!
Friday, February 18, 2011
The Fed...Home Buying and the Realtors part....Why can't winter be over?
Well the Feds came out this week and held things constant. Of course the housing market and employment market are the 2 things that they see as holding our economy back. They do see some modest growth but nothing that they are yet concerned on in regards to inflation. Until we see the labor force improve as well as the housing market.....interest rates should stay low. Home affordability is at a high right now between rates and home prices. Any realtor will tell you that you will get more bang for your buck right now then you ever will.
Speaking if Realtors....if you are going to buy a house you will be wanting one. Realtors are there as an advocate for you in the home buying process. A good realtor will listen to your home need wants and actual needs. By doing this they will hopefully be able to help find a home for you to purchase that is in your price range and meets or exceeds what you are looking for...especially in this market since a $300,000 house is now a $200,000 house.
You want to make sure that you pick your realtor just like you pick your loan officer. They should be willing to listen to you and you should feel comfortable with them Don't just pick a realtor because their name is on the home sign...pick them because you feel you can work with them.
Typical things that a realtor does for you include:
Educating you on the market
Analyze your wants and needs (said that already ..didn't I)
Steer you to homes that fit your criteria
Coordinate the work of other needed professionals
Negotiate on your behalf
Review paperwork and deadlines
Solve potential problems
Here in the Midwest this week we got treated to some really nice weather only to wake up today to the cold once again. It was like a big tease but I think that we all needed a little hint of spring to keep us going. It has been an odd winter everywhere this year even on the west coast.
And right now our neighbors to the east are having issues with collective bargaining and their governor...teachers and students walking out of classrooms......and we thought we had it bad with Jesse Ventura.
Have a great weekend.
Speaking if Realtors....if you are going to buy a house you will be wanting one. Realtors are there as an advocate for you in the home buying process. A good realtor will listen to your home need wants and actual needs. By doing this they will hopefully be able to help find a home for you to purchase that is in your price range and meets or exceeds what you are looking for...especially in this market since a $300,000 house is now a $200,000 house.
You want to make sure that you pick your realtor just like you pick your loan officer. They should be willing to listen to you and you should feel comfortable with them Don't just pick a realtor because their name is on the home sign...pick them because you feel you can work with them.
Typical things that a realtor does for you include:
Educating you on the market
Analyze your wants and needs (said that already ..didn't I)
Steer you to homes that fit your criteria
Coordinate the work of other needed professionals
Negotiate on your behalf
Review paperwork and deadlines
Solve potential problems
Here in the Midwest this week we got treated to some really nice weather only to wake up today to the cold once again. It was like a big tease but I think that we all needed a little hint of spring to keep us going. It has been an odd winter everywhere this year even on the west coast.
And right now our neighbors to the east are having issues with collective bargaining and their governor...teachers and students walking out of classrooms......and we thought we had it bad with Jesse Ventura.
Have a great weekend.
Tuesday, February 15, 2011
Home Buying continued....and The Government and all of its Reform's
If you have been following me on twitter (@omsiguy) or on Facebook (http://www.facebook.com/#!/profile.php?id=1406307637)
then you have seen all of the updates coming out pertaining to the government and everything that it is trying to do.
Their road of reform is continuing in regards to the financial and mortgage market and some of it makes sense but most of it seems like a long shot to accomplish and implement. Bottom line is our government wants to dictate what, where, when, why and how the mortgage industry does what it does. The greed that ran throughout a few years ago was not just in the mortgage industry itself but also with investors and consumers as I have previously mentioned and now they want to jump in after the fact to say how we can conduct our business.
The main problem that I have is that the majority of the people involved do not understand what getting a mortgage is like for the average person or what providing a mortgage can all involve. As a result some of the changes that they want to make could make things increasingly difficult for consumers and for mortgage lenders of all type. What we could end up with is a small monopoly of players in the mortgage business that would and could control the bulk of things including where interest rates are set.
But lets see what all gets done and what constraints are placed....perhaps we will be lending money for mortgages and calling it soiled green.
Back to Home Buying.......
Now that your file is put together and obtained all of the information that is needed as well as picking the correct loan product to go with...it is time for underwriting. The lender would if they had not already updated the file and re ran an automated underwriting decision.
Once this was done the lender would submit the file to an actual underwriter with all of the supporting information so that they can review for approval based on the specific underwriting that a lender has in place. These overlays can be basic to extreme and may cause a loan that is approved on the automated system to not be approved.
After the underwriter has reviewed the file they may have some additional questions or requirements that are needed for the loan. This is not unusual in the lease. The questions or requirements could be very basic or complex dependent on what the file looks like and the constraints of the file and the loan program The lender wants to do the loan...but they want to make sure that they have everything covered to make sure that there are no issues down the road. Every T needs to be crossed. The title, appraisal and the actual credit portion of the file will be looked at closely.
The lender has a fiduciary obligation to protect you and themselves when approving the loan. This is why, especially in the last few years, they have become so much more picky. They are running the risk of buying the loan back from the investor if the file is not perfect in every way.
Now that your loan is approved...lets go buy a house.....(or complete the refinance).
I will start to go over a little of the home buying process and other items in the next blog.
There is so much information that I could share with you in these blog entries so please be sure to ask questions if need be.
Remember if you follow me on twitter or face book I provide a lot more information in relation to the mortgage and real estate industry.
Have a great week!
then you have seen all of the updates coming out pertaining to the government and everything that it is trying to do.
Their road of reform is continuing in regards to the financial and mortgage market and some of it makes sense but most of it seems like a long shot to accomplish and implement. Bottom line is our government wants to dictate what, where, when, why and how the mortgage industry does what it does. The greed that ran throughout a few years ago was not just in the mortgage industry itself but also with investors and consumers as I have previously mentioned and now they want to jump in after the fact to say how we can conduct our business.
The main problem that I have is that the majority of the people involved do not understand what getting a mortgage is like for the average person or what providing a mortgage can all involve. As a result some of the changes that they want to make could make things increasingly difficult for consumers and for mortgage lenders of all type. What we could end up with is a small monopoly of players in the mortgage business that would and could control the bulk of things including where interest rates are set.
But lets see what all gets done and what constraints are placed....perhaps we will be lending money for mortgages and calling it soiled green.
Back to Home Buying.......
Now that your file is put together and obtained all of the information that is needed as well as picking the correct loan product to go with...it is time for underwriting. The lender would if they had not already updated the file and re ran an automated underwriting decision.
Once this was done the lender would submit the file to an actual underwriter with all of the supporting information so that they can review for approval based on the specific underwriting that a lender has in place. These overlays can be basic to extreme and may cause a loan that is approved on the automated system to not be approved.
After the underwriter has reviewed the file they may have some additional questions or requirements that are needed for the loan. This is not unusual in the lease. The questions or requirements could be very basic or complex dependent on what the file looks like and the constraints of the file and the loan program The lender wants to do the loan...but they want to make sure that they have everything covered to make sure that there are no issues down the road. Every T needs to be crossed. The title, appraisal and the actual credit portion of the file will be looked at closely.
The lender has a fiduciary obligation to protect you and themselves when approving the loan. This is why, especially in the last few years, they have become so much more picky. They are running the risk of buying the loan back from the investor if the file is not perfect in every way.
Now that your loan is approved...lets go buy a house.....(or complete the refinance).
I will start to go over a little of the home buying process and other items in the next blog.
There is so much information that I could share with you in these blog entries so please be sure to ask questions if need be.
Remember if you follow me on twitter or face book I provide a lot more information in relation to the mortgage and real estate industry.
Have a great week!
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