September 2nd, 2010 by Darcy
A quick look at the rates today for the MN Housing programs sent us all into an uproar at the office. MN Housing is quoting 3.75%* for a government 30 year (yes, 30 years, not 15), fixed rate. This is for their MMP program which doesn’t require the 8-hour Homestretch class, offers no down payment assistance, but DOES offer a great rate. And when I say great rate, I mean “out-of-this-world-I-can’t-believe-it’s-not-an-adjustable-rate-Macaulay-Culkin-shocked-look” rate. This is off the charts. Who would have guessed we would not only see rates this low, BUT, see them on the special first time buyer programs? Certainly not me!!
Let’s look at some figures using a loan amount of $150,000 (these estimates do NOT include taxes, insurance, mortgage insurance or dues):
- Rate: 3.75%**
- Principal and interest: $695
- Total interest over 30 years: $100,042
Compare this to the rate prior to 4 PM today …
- Rate: 4.25%**
- Principal and interest: $738
- Total interest over 30 years: $115647
So, the monthy savings is just $43/month, which means $516 a year. Okay, so not really a HUGE difference; BUT, check out the 30 year savings in interest — over $15,000. That’s just crazy! You could take that $43/mo and add another $6000 or so to your purchase price. That may be worth it just to get into another price bracket.
So what about the zero down payment program? That rate came down too — also by 1/2% — from 5% to 4.5%** Remember, this program’s primary benefit, other than NO down payment, is that there is no private mortgage insurance (PMI). A regular 30 year right now is about 4.5% or less without using a first time program. Well, if you had less than 20% down, you would be required to have PMI. On the above $150,000 loan the PMI would be about $65 in your payment, eating away at what you could afford.
We are in some crazy times right now, but I cannot say it enough — NOW IS THE TIME to buy a home. There hasn’t been, and will probably never be, another time in our lifetime to have so many benefits — low rates, low home prices and many special first time buyer programs just waiting to help you get into your first home. Let me be the one to do that too!
*Rates are subject to change without notice. This is not an offer to enter into an agreement. **Assuming 5 days of interest on a $150,000 loan amount, the APR for these rates are 3.899%, 4.403% and 4.656% respectively
Tags: first time buyer programs, first time home buyer, home buyer seminars, low rates, rate, zero down payment
Posted in Assistance for Down Payment, First Time Buyers, Posts | No Comments »
August 24th, 2010 by Darcy
Are you currently pre-approved wth FHA financing? For many, this is the way to go — minimum down payment (3.5%), lower acceptable credit scores (620) and higher allowable seller paid costs (6% of the sale price which will be lowered soon to 3%). One thing that always frustrates FHA borrowers is the Up-Front Mortgage Insurance Premium (UFMIP) and the monthly mortgage insurance. Why is FHA charging twice for the same thing? Let me explain.
First, it’s good to know that FHA is self-insured. So, if you default on your loan, they provide insurance for the investor. Whereas on a conventional loan, you pay Private Mortgage Insurance (PMI) to insure the lender in case of default. The PMI is provided from an outside company and is required on all loans with less than 20% down. (Of course, if you qualify, you may be able to get the new MN Housing program that DOESN’T require PMI or a down payment!)
FHA requires the UFMIP on all loans and a monthly amount on all loans regardless of your down payment situation — minimum down of 3.5% or 50% down — you’ll still have it. One thing many people don’t know is what ELSE the FHA insurance covers. Let’s say you lose your job and are having a tough time making your house payment. Like most, you don’t want to lose your home. FHA’s insurance covers job-loss protection. FHA may pay up to 12 months of your house payment to save your home and keep your payments on time with your lender. Those payments will be added on to your loan on the back end.
Right now, the UFMIP is 2.25% of the loan amount. In all of the deals I do, this is rolled into the loan, not paid out of pocket. This will raise your payment because your loan amount increases. The monthly amount is .55% of the loan amount, divided by 12 to get the monthly figure.
Here is what you need to know: any new case numbers* assigned ON or AFTER 10/4/10 will have different UFMIP and monthly MIP. Good news is the UFMIP will DECREASE to 1% of the loan amount vs. the current 2.25%. This is a good change. The annual premium, or monthly amount, will be INCREASING to .90% of the loan amount — almost double what it was at before. So what, right? Well, let’s look at the numbers.
Scenario:
- Purchase price $200,000
- Rate at 4.5% over 30 years
- 3.5% down or 96.5% LTV
Old MIP Scenario
- Loan with UFMIP is $197342
- UFMIP that is included in above loan amount is $4342
- Monthly MIP is $88
- Principal and interest is $991
NEW MIP Scenario
- Loan with UFMIP is $194930
- UFMIP included above is $1930
- Monthly MIP is $145
- Principal and interest is $988
Difference? Payment is $54/month HIGHER with the new plan. That means, in real terms, you can afford about $7500 LESS in purchasing power. Sure, that’s the downside. But, if you stick with your home for 7 years, you will actually “wash” the difference. Though FHA will get more of your money upfront (vs being rolled into the loan), you will have MORE equity at that time than with the original plan). And, stay in your home 10 years, the MONTHLY amount should drop off assuming you’ve reached 22% equity in your home based off your original purchase price.
The moral of the story — buy as soon as you can if you’re using FHA. $7500 in buying power is HUGE! Most of you will just stay in your home for 5-7 years if it’s your first home so the “wash” really doesn’t matter. And who really wants a payment that is over $50/mo more? Not me.
So, when’s the time? Now! Why is it now? To save on your monthly payment and BUY more home!
*case number: the number assigned by FHA for your property purchase. It follows the address and is how an appraisal is ordered.
Tags: FHA, first time buyer programs
Posted in First Time Buyers, Posts, Tips & Tidbits | No Comments »
August 9th, 2010 by Darcy
Are you a first time buyer just waiting to get a home? Are you trying to save, but finding it tough to do with all your other obligations? MN Housing has come to the rescue! Starting around August 16th, with a signed purchase agreement, you’ll be able to obtain 100% financing on a conventional loan. This just may make it easier to get a loan on some of those homes not allowing FHA financing.
Thankfully, MN Housing realized there was a huge need to bring this back to the first time buyer. Currently, the most minimum down payment you can do is an FHA loan — 3.5% down. Conventional financing does allow for 3% down, but the private mortgage insurance is higher. Due to this, and the fact that MN Housing offers a lower rate on FHA, the payment is lower than a conventional MN Housing loan.
Now, we finally have a conventional alternative where the payment IS less than FHA!!! Here are the parameters to the program:
- NO down payment
- NO monthly mortgage insurance
- Must be first time homebuyer
- Maximum household income 1-4 person $83,900
- One unit home, townhome or condo
- Minimum credit score 680
- Seller can pay up to 3% of the sale price toward your closing costs or pre-paids
- Minimum investment of YOUR money — $1000
- Must attend the Homestretch class
Let’s look at an example comparing FHA to this new program.
In the scenario above, you could actually increase your purchasing power by about $4000, which may not seem like a lot, but could get you up to a different price point. This program has so many positives. Let’s hope it can help you afford the home you’ve been wanting to buy!
Tags: conventional, credit score, first house, first time buyer programs, first time home buyer, home buyer seminars
Posted in First Time Buyers, Posts, The Home Buying Process | 2 Comments »
August 2nd, 2010 by Darcy
Kind of a silly question, right? Most people think refinancing makes sense whenever the rate is lower. I would concur, but the question is, how much lower does the rate need to be to make sense?
General rule of thumb — rate should be at least 1% lower, but usually 1 1/2% lower is the best financial move. But why? The rate is lower, so you’re saving money; seems to be a no-brainer, right? Here’s the deal. A refinance costs the same as purchasing a home. Though you can do a no-cost refinance, you’re still paying for it by paying a higher rate.
No-cost means the lender costs are covered by the rate. You still have title company charges, county fees, as well as the initial deposit for your taxes and insurance escrow. The good news is you may essentially get reimbursed for all or a portion of the initial deposit when you receive a check from your old mortgage company with the balance of your previous escrow account. This happens about 3-4 weeks after your refinance closing.
When looking to refinance, it’s best to get a copy of a good faith estimate or cost analysis to really determine if this financial move is a reality. Many loan officers will give you the payment to entice you to do business with them. The payment is absolutely an important piece to consider. It’s what drove you to consider this, right?? It someone tells you what you want to hear, you just may lock that rate.
You need to know more which is why you need the estimate. Here are some questions to consider.
- How much are the lender’s costs?
- How much are your yearly savings?
- How long do you intend to stay in your home?
- Do you have more than one loan against the home?
- Will your home value support a refinance?
These are just a few questions to ponder. It’s my goal to tell it like it is — if a refinance makes sense, then I am all for helping you out. If it’s not, then let’s talk about what may make sense — paying extra, going to a shorter term or just staying put. Just know, your financial well-being is my top priority. It doesn’t benefit me to give you bad advice.
Tags: good faith estimate, lower interest rate, refinance
Posted in Is Refinancing for You?, Posts, Tips & Tidbits | No Comments »
July 15th, 2010 by Darcy
| July 15, 2010 |
| 6:30 pm | to | 8:00 pm |
I can’t believe how quickly the third Thursday of the month came! Wow. I’m ready to educate you on the home-buying process.
The FREE seminar starts at 6:30 and ends between 7:30 and 8pm. This seminar has been presented many times and continues to be a successful avenue for first time buyers to get their feet wet on the process of buying home. Be prepared to learn what you need to do starting with the pre-approval from a lender to getting the keys at closing. There are a lot of steps in-between but if you’re familiar with them, the process will be much smoother.
Needless to say, the market is a little upside down. Things have and are changing daily with regards to down payment, credit requirements, as well as documents needed to verify assets or income. What hasn’t changed are the great opportunities to get into a home at a great value, pay as little as $750 out of your pocket AND take advantage of some great programs made especially for you.
I will be honored with the presence of my first time buyer partner, Steve Howe. He will address the other “stuff” you need to know about making an offer, inspections and the process in general.
Our goal for the evening is to give you the information you need to feel comfortable about setting foot into the world of buying a home and eventually, home-ownership. We want to educate and honestly hope you will gain a clear understanding of the process, as well as the great opportunities the market has to offer you right now.
Please RSVP to Cheryl by clicking here. You can bring as many guests as you want and most importantly, come with questions! See you tonight.
Tags: credit, down payment assistance, first time buyer programs, first time home buyer, home buyer seminars, loan process, loan qualifying, purchase agreement
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Upcoming Events | No Comments »
July 13th, 2010 by Darcy
With rates falling, a few of the first time buyer programs have been lagging behind as they still have higher rates. A regular FHA fixed rate is between 4.5% and 4.75%* today. The Dakota County program’s rate was at 4.99%. Many people are still taking advantage of the program since it offers down payment assistance. Recently, they lowered the rate to 4.75% to be competitive with the market. So you know, this is a rare thing for first time progams. Normally when there is money alloted to the counties, the initiative is set at a certain amount of funds and a certain rate. This is great news!
To repeat, many people are taking advantage of this program not just for the rate, but the opportunity to get down payment assistance. The Dakota County program offers three tiers of assistance depending on household income. Household income is defined as income brought in by all people in the home over age 18 and includes such income as bank interest, child support/alimony, side jobs, etc. Even if the income can’t be used for qualifying (i.e. overtime that has been received for less than two years), it is still figured into the limits for first time buyer programs. Here are the down-payment tiers:
Household 10% 5% 2.5%
Size Income Limit Income Limit Income Limit
1 $29,400 $45,100 $84,000
2 $33,600 $51,550 $84,000
3 $37,800 $58,000 $92,400
4 $42,000 $64,400 $92,400
5 $45,400 $69,600 $92,400
6 $48,750 $74,750 $92,400
7 $52,100 $79,900 $92,400
8 $55,450 $85,050 $92,400
Max assistance for the 10% limit is $10,000 and max for the 5% limit is $7500.
So what do the numbers mean? Let’s reference the middle column. Let’s say you have 3 people in your household. That means your total household income must be under $58,000 — one cent over and you go to the next column. In this scenario, you qualify for down payment assistance equal to 5% of the base loan amount, with a max of $7500. The first time buyer assistance is a second mortgage that is placed against your home when you close. It is an interest-free and payment-free loan. If you received $7500, you would pay back $7500 either when you refinance your loan or sell your home.
If you’re looking in Dakota County for your first home, definitely check out this program. All lenders are not created equally with first time programs. Lenders must be approved to do this financing. Obviously, I can help! It’s time to take advantage of all you have to gain as a first time buyer in this market!
*Rates are subject to change.
Tags: Dakota County, down payment assistance, first house, first time buyer programs, first time home buyer
Posted in Assistance for Down Payment, First Time Buyers, Posts | No Comments »
July 8th, 2010 by Darcy
This is a common question now that rates have fallen to the lowest levels in well over 40 years. This means you can get, as of today, rates around 4.5% for a 30-year fixed rate — WOW! It would appear that everyone who has a mortgage should refinance because if you can get a lower rate, why wouldn’t you? In some instances, I would agree; but, the answer is in the numbers.
Currently, I am telling all clients that there will be NO reason for them to refinance. It won’t make financial sense; their rate is just too low. As a homeowner, you may get solicitations to refinance because mortgages are public record. Thing is, the lender doesn’t know your specifics, nor do they have your best interest in mind. My current clients, from the last year or so, know I won’t call them to refinance since I DO care whether they do the right thing.
So when does it make sense? One general rule of thumb is the new rate should be more than 1% lower than your current rate. This isn’t true for all people though. If what you owe is less than $150,000, you may need the rate to be closer to 1 1/2% – 2% lower. And if your loan is less than $100,000, I would say it almost never makes sense to refinance. You’re better off making principal payments.
Why though? Since you’re taking out a new loan, you will have origination charges along with all the fees involved with a new loan — title company fees, setting up your escrow account and county fees. Sure, you may hear that there are no closing cost refinances, but I am here to say nothing is free. Your charges are either added to your loan, covered with a higher interest rate or being paid out of pocket by you or a combination thereof. It’s time to run numbers!
To get a true sense if a refinance is a sound financial decision, you’ll want to gather the following information:
- approximate value of your home (tax assessed values are actually higher than current values)
- your current loan balance(s) on any first, second or home equity lines of credit
- your current loan rate(s)
- annual property taxes
- annual homeowner’s insurance if a single family home
- current principal and interest payment
- your goals — reduce rate, take cash out, etc.
- type of loan, i.e. fixed rate, term or ARM
- occupancy of the home, i.e. owner occupied, second home or investment property
These will enable me to run figures and determine the “payback” time frame. I recently had a past client do a refinance. They were saving $200/month. That’s a lot of money! Their costs were about $4400 which covered lender fees, title charges and county charges. Setting up the escrow is not figured into this equation. Escrows are pre-paid expenses that cover future payments of taxes and insurance. My client would pay for these regardless of refinancing or not.
Anyway, the calculation I run is based on the savings per year – $2400 – divided by the costs of $4400. He’s going to re-coup these fees in 1.8 years, so under two. This is the second rule of thumb. If it takes longer than two years to recoup the costs, then refinancing may not be the right move. Now, going to a shorter term or going from an Adjustable Rate Mortgage (ARM) to a fixed may make sense even if the time-frame to recoup is higher. Biggest question here … how long will you be in the home? Though we never really know the answer, it will certainly help guide the financial soundness of the refinance.
For those of you with second loans or home values close to or than what you owe, refinancing may just NOT be an option, regardless of the savings. Long and short — “maybe” is the answer to the title question. It’s not right for everyone. And when you work with me, I will make sure you know whether it’s right for you or not. I would rather give you the straight scoop than have you upset that you did something you should not have.
Send me the answers to the bulleted items above. Let’s see if refinancing IS right for you!!
Tags: closing costs, low rates, refinancing
Posted in Is Refinancing for You?, Posts | 3 Comments »
July 1st, 2010 by Darcy
Can you say “whoopee?”
Late Wednesday night (June 30th), the Senate took the lead of the House of Representatives and passed the Homebuyer Assistance and Improvement Act which extends the CLOSING date for those eligible to receive the federal tax credit under the American Recovery and Reinvestment Act. This is part of the bill that was presented. You can see other details of this bill here.
First time buyers, those who haven’t owned a home in the last three years, as well as current owners who have owned a primary residency 5 of the last 8 years, were eligible for a tax credit if they purchased a primary residence — up to $8000 or $6500 respectively. The guidelines required buyers to have a signed purchase by April 30th and CLOSE on the home by June 3oth.
The problem was that many of these home purchases were being held up buy a multitude of things — the banks that own the homes, the banks that are considering a short sale for the sellers and even title and mortgage companies. The argument was that the buyer was not at fault for this delay if they had the signed agreement by April 30th so they shouldn’t be penalized. Low and behold, buyers now have until September 30th to close on their house to still get the federal tax credit!!
So, if you are one of those people that thought you missed out on the credit because something was preventing you from closing on your home prior to June 30th, yesterday, then you can breathe a sigh of relief! Good luck with your process and enjoy this awesome gift from the government!
Tags: 6500 tax credit, 8000 tax credit, federal stimulus, first time buyer programs
Posted in First Time Buyers, Posts, The Home Buying Process | No Comments »
June 23rd, 2010 by Darcy
Is this house-hunting thing making you feel a little unraveled? With all the homes on the market, people telling you to “buy now” and the overwhelming amounts of information about programs — who can blame you for not keeping it together! Okay, so maybe do have this process all figured out. I commend you for doing some homework and getting educated.
Let’s start with what you need to do BEFORE you start househunting — get pre-approved with a reputable and reliable lender. A pre-approval means you’ve completed an application with a lender, had credit pulled, provided supporting documentation and your loan has been through an automated underwriting system and/or been seen by an underwriter. If these things DON’T happen, you’re NOT pre-approved. There are many things that the lender looks at when determining your qualifications.
In order to determine the accuracy of your application, we must gather supporting documentation — hence, having you “pull it 
together”. The list applies to anyone on the loan application and not all items on this list will pertain to everyone.
-most recent TWO paystubs
-last TWO years W2s*
-last TWO years federal taxes, all schedules*
-most recent month bank statement, showing beginning and ending balance, all pages
-most recent quarterly statement for any accounts not monthly, i.e. retirement, stocks or bonds, all pages
-any court papers such as decrees or bankruptcy documentation
*If you intend on using a first time buyer program, you will need the last THREE years W2s and federal taxes. This proves to us and the first time buyer powers-that-be that you have not owned a home in the last 3 years which is the criteria to be considered a first time buyer.
I know what you’re thinking … along the way I may ask for more, including your first born, right? People have stories and some are quite good. My goal is to get everything I need upfront so there aren’t last minute dashes to find other paperwork. Also, if other things enter your situation for buying, we need to address them with … more paperwork, i.e. a gift from family or document a large deposit into your account. If you want to avoid some of the pitfalls that can cause havoc in your loan process, check out this great article written by my manager. She makes a very boring thing, like what not to do while in the process, very funny.
Moral of this story — pull it together to support your application information. If other documentation is requested, please provide that in a timely manner. The sooner we have your paperwork, the better. And before I forget, I am NOT perfect. I make mistakes and sometimes miss things. So forgive me if I ask for something you gave/emailed me. I have so many conversations in a day and receive my share of emails. I try to keep it all straight, but sometimes, it’s just better to ask again. No double guessing. The past few months have been fun as I am working with three ladies that all have the same first name! Mama Mia! So, forgive me now. And most importantly, just know that you WILL be given the best service and communication around.
Tags: finance closing costs, first time home buyer, loan qualifying, pre-approval
Posted in First Time Buyers, Posts, The Home Buying Process | 1 Comment »
June 21st, 2010 by Darcy
| July 15, 2010 |
| 6:30 pm | to | 8:00 pm |
We just completed another successful first time buyer seminar this past Thursday night. That was quite the night of storms — thought we might be talking to a small, non-existent audience, but we got lucky and people “weathered” the storm! I hope you all did too and thanks to those of you who did make the trek!
Every month, on the third Thursday, we perform an exciting light show with music and dance — okay, not really. But we do present an evening of information so you can learn what you need to know before you get out and look at homes. Please join us from 6:30-8 pm at the Cornerstone Mortgage office located in Burnsville at 436 Gateway Blvd.
Steve Howe from Re/Max, and I, will walk you through the homebuying process starting with the first step … pre-approval. That’s the step of getting your financing set up so you know you can actually purchase a home if you find one. This is CRUCIAL in today’s market since, as a loan officer, I am seeing changes constantly on what investors are requiring to get a loan. Come learn what the new changes are and come find out about the special programs you may be eligible for to help you afford your new home.
Steve will explain the home purchasing process and what you can expect from a Realtor. He makes this process simple and easy to understand; whereas I just confuse you! Just kidding. Making sure you’re still reading! He specializes in in helping first time buyers which is important since your needs are vastly different than a current homeowner.
Anyway, we’d love to have you at the seminar, whether it’s in July or our future classes. And speaking of classes — this is NOT the Homestretch class that is required to qualify for the first time buyer programs. You can see this as the Cliff Notes, but with additional information on the special programs that Homestretch doesn’t delve into.
Please RSVP with Cheryl to let us know how many spaces to save. Can’t wait to meet you! Oh and one pre-requisite … come with questions!
Tags: down payment assistance, first time buyer programs, first time home buyer, home buyer classes, home buyer seminars, loan process, loan qualifying, pre-approval, purchase agreement, Realtor
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Upcoming Events | No Comments »
June 13th, 2010 by Darcy
| June 17, 2010 |
| 6:30 pm | to | 7:30 pm |
Every third Thursday of the month we are happy to offer you a free seminar* to learn more about the First Time Homebuyer Process. Join us on Thursday, the 17th, 6:30-7:30 pm at the Cornerstone Mortgage office located at 436 Gateway Blvd in Burnsville.
From the starting point of getting pre-approved and all that entails to going to closing and signing a bunch of papers to officially dub you a First Time Home OWNER! We are here to educate, not sell you something. Steve Howe, Realtor with the Minnesota Real Estate Team, and I will also talk about purchase agreements, the many down payment assistance programs and answer ANY questions you have. Ultimately, we hope you will leave the seminar with a greater understanding of buying a home.
If you’d like to attend, please call Cheryl (952-808-0042) or email her to get your name on the list. Bring any questions you have so we can address those throughout the seminar or at the end. We look forward to seeing you this week!
*This is NOT Homestretch. Go to www.HOCMN.org to register for this 8-hour class.
Tags: down payment assistance, first time home buyer, home buyer seminars, loan process, pre-approval, Realtor
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Upcoming Events | No Comments »
June 11th, 2010 by Darcy
With so many foreclosures in the marketplace, you are bound to purchase one. Thing about foreclosures is the process can be a little trying. There are a few reasons for this. First, you’re dealing with a bank, so timeliness is not always a priority on their part. You may not get a decision on your offer as quickly as you’d like. Sometimes, banks will set a date purchase agreements are due requesting the “highest and best” offers. This means they’re looking for multiple offers and in this instance, they may have originally priced the home lower than market to create this frenzy. It is what it is and if it’s a home you want, you have to play by their rules.
Will this Close?
Another thing you can expect with a foreclosure is an “as-is” addendum. This means that you are buying the house without a seller’s disclosure and in most instances, the bank won’t fix anything if there are any issues with your inspection or appraisal. Oh, and speaking of inspections … just because it’s sold as-is does not mean you can’t get one or make your offer contingent on one. It’s still highly recommended. Let me give credit to some banks out there. Some WILL do repairs which can be beneficial to you. Also, just because it’s bank-owned doesn’t mean you can’t ask the bank to cover some or all of your costs. A good Realtor will be able to advise you on this aspect of your purchase agreement.
The reason a bank completes an as-is addendum, is they have no knowledge of the home. They’ve never lived there and I’d be shocked if anyone from the bank has even been to the house. So, if there was previous water damage, storm damage or anything that may negatively affect the home, they won’t know about it. Typically, there is no personal property offered in these deals. For instance, if the kitchen still has the appliances, they cannot guarantee they will be in the home when it transfers to you. If they happen to be there when you move in — woohoo — extra bonus!
When working with the banks on these foreclosures, you can expect, in most cases, that the bank will require you to close with a title company they have chosen. The bank will run all their transactions through this title company for ease and for familiarity. Typically, the bank will offer to pay your owner’s title policy. So you know, the bank may require you to close with their chosen company, though by law, you technically CAN choose your own company. I would highly recommend you get a solid recommendation from your agent or lender. Many title companies will adjust their fees to compete with the bank’s company. I deal with title companies all the time and I know who performs and who could use a little work. Those that can use a little work are not all bad. There may be delays in getting paperwork or closing scheduled, but it eventually gets done.
Sometimes, it doesn’t. Here’s what happened that should have never happened. A recent transaction I had didn’t close on it’s desired close date and then didn’t close a week later. It wasn’t the client’s fault. It wasn’t due to financing — package and funds were there. It wasn’t due to the Realtors not doing their job — they did all they could. It ALL had to do with the title company. This “title company” had no presence in MN. The people were slow to answer emails and rarely answered phones. They didn’t meet with clients, but sent a notary — very impersonal. Not only that, the title work was “outsourced” which made matters worse.
Needless to say, we needed some paperwork, which took a few weeks to get after persistent emails and calls. We needed the closing to be scheduled so we knew when to date the closing paperwork and the buyers knew when to be available — never was set. Since we finally had the necessary paperwork, the agents and client set a date; we sent the package and wired funds. It’s typical for the title company to provide a HUD to the lender for approval. The HUD is the itemization of the settlement charges. We spent the morning of the ”rescheduled” closing date burning the phones up to the closer, as well as emailing. Nothing. Right after lunch, we requested the wire be sent back since there was no response or HUD. Low and behold … a response with a request to give them some time as they are working on the HUD. That was it, the last communication. I am not sure why an extra week wasn’t enough time. Come Monday we still didn’t have the wire back.
Seems pretty bad, huh? It is unacceptable to have such poor communication. In the 16 years I have originated loans, I have NEVER 
experienced such disregard to all the people involved. If you think the above is bad … the following is worse. The family moved from their apartment, had their lives in a truck, their kids hours away with family and no place to go expecting to close on the date set in the purchase agreement. So, that week the buyers had to pay to store their stuff and live in a hotel, with many days of frustration and uncertainty. Who wants to go through this? They didn’t deserve this. The day the funds were at the title company, we waited … and waited … and the return calls never happened nor did the HUD arrive. The buyers moved on and are now renting month to month. They had to, had to provide a home for their children and stop waiting for a closing that wasn’t happening. Why? Because a title company couldn’t get their ducks in a row, didn’t have the same customer-focus as the others involved and didn’t have the desire to make it happen.
How could this have been prevented? Bucking the system with the bank and choosing their own title company. Does this mean everything would have been rosy? Not necessarily, but it would have meant familiarity by those who matter — the buyers, agents and mortgage company. It would have meant the personal touch of having a person to talk to, someone to depend on and someone to sit across from who knows the programs and can explain the paperwork — not just a notary to stamp after each signature — which is how they planned to handle the signing. These people could have saved hundreds, not to mention all the time lost in work, on the phone and away from their children. How do they get that back? How can they be compensated for what they lost? They can’t and that is a shame.
Working with the right people doesn’t just mean your Realtor and loan officer. EVERYONE involved in the transaction needs to have the same goals in mind … YOUR goals in mind. This obviously includes the title company. As you can see, they can make or break a transaction — a preventable situation. I am hopeful that this family can get their lives back in order and I truly hope they can trust again to take that magical step of owning their first home. They actually gave the title company one more shot and … of course, they still didn’t close. I pray homeownership happens, as everyone deserves to own a home and more importantly, everyone deserves to be treated fairly, like they matter and be given the common courtesy of great communication.
Tags: bank-owned, first time home buyer, foreclosure, homeowner's insurance, HUD, owner's title insurance, purchase agreement, title company
Posted in First Time Buyers, Posts, The Home Buying Process | No Comments »
June 1st, 2010 by Darcy
Believe me; I ask myself this daily. You hear that you need 20% down to get financing or sterling credit. And though these are GREAT attributes, they aren’t a guarantee that you will get a mortgage OR that you won’t have to go through a few hurdles. It used to be so easy to get financing. It wasn’t that we just handed money out to anyone, though there were people who did and look where that got us. It’s not just them; it’s the lenders that accepted high risk buyers and did deals that should have never been done. This is neither here nor there. Right now, we need to focus on what the rules or guidelines are NOW, not what they used to be. Those days are gone my friends.
Let’s start with the simplest issue I see today and the piece that has had the most changes — CREDIT. Let’s talk about credit scores first. Way back when, credit scores mattered; but they weren’t as much of a guage as they are now. What I mean by that is we were able to create credit for people if they had lower scores or if they had NO scores. It may have been acceptable to help someone who had lower scores, let’s say 560, if we could show clean credit on alternative sources such as insurance, utilities, rent, cell bills, etc — this is how we “created” credit. And, if there was a clean credit history in the last 12 months, this deal could have probably worked. Now, the line is drawn. For the most part, you will need scores AND the middle of the 3 scores (most of us have a score from each bureau – Experian, Equifax and TransUnion) must be at least 620 or higher. This is NOW. I am guessing in the next few months, or sooner, most investors will be at 640, as some have already taken that leap.
Still referring to credit, you now need at least THREE tradelines (an item of credit on your credit report) AND they each must have 12 months’ history. Plus, these lines need to be current. Let’s say you haven’t done anything with your credit for a few years because you worked abroad. You may have great credit scores because, before you left, you did a good job managing your credit. Unfortunately, most, if not all, of your tradelines will be older in terms of the last active date. This is one of the things that’s catching people and making it so they can’t get a loan. It’s a shame really because you can tell they’re good at making payments and are responsible. Thing is, the score isn’t a true representation of their credit since it doesn’t have current information reporting. There is one exception to this rule, as of now. The 3 main first time buyer programs, CityLiving, Dakota County Bond and MN Housing, in conjunction with an FHA loan, will allow less than 3 tradelines and less than the 12 month history. If there is a score, it must still be over 620, however. With the first time programs, we would work on creating credit and we WOULD need to find 3 items of credit to have added to our credit report — again, car insurance, utilities, layaway plans, healthclub memberships, utilities, etc., are all items we can use to create your history. And by the way, this will NOT help your score as we do this on our credit report we pulled. This does not get reported to the credit bureaus.
Another fun credit change that is COMING, and fast — Fannie Mae is requiring that lenders verify the borrower’s credit prior to closing. It’s under the new Loan Quality Initiative. Some Minnesota lenders have already put this in motion. The interpretation of pulling credit prior to closing is within 48 hours of closing. So, in my article, “Things Not to Do”, you learned that while in the loan process, don’t open new accounts or close accounts. Well, this just became CRUCIAL to follow. If you open a new account, just have a creditor check your credit for a possible new account, increase balances on what you owe, or anything … your approved, ready-to-go-to-closing loan could be un-approved. For instance, the credit pull or increase in balances, could have dropped your score under what your approval requires. Or, the new debt now makes it so your ratios are too high for qualifying. If you want to deal with stress or the possibility of not closing on a home, then feel free to mess with your credit. My advice is far different and will be quite bold. If you want your loan to stay approved, DO NOT, under any circumstances, open new credit, consider opening new credit so your credit has to be pulled by another lender or increase your balances on your current debts. This could make or break whether you close on your home or not. There is no first time buyer exception to this either, so my advice stands in all circumstances — Just Don’t!
What else is making it hard to get financing? How about qualifying ratios? This is how a lender determines what you qualify for. We use your gross monthly income and run some calculations. In most cases, the “debt ratio” is the most common one for us to look at. We want to make sure your new house payment PLUS all other obligations, does not exceed the program guidelines. Essentially, for most loans, that means not spending more than 45% of your income toward the new housepayment and your other debts. PMI companies (private mortgage insurance) have put their guidelines on this too. Many PMI companies require a ratio of 41% or less. Even though you may have an approval through an automated underwriting system, the PMI company could trump it and disapprove your loan due to excessive ratios. I can remember the “days” when we saw ratios at 65%. Now, was that a good underwriting decision? Maybe, maybe not. For an underwriter to make this call, the borrower must have excessive compensating factors, such as plenty of money left over after closing, good credit scores as well as good job stability.
This is a small sampling of the changes in the loan industry. They are a few of the guideline changes that have impacted much of the business I do. So, in answer to the blog’s title question … yes, many people can get loans. No, you don’t need 20% down and sterling credit. Fortunately, FHA is a great loan requiring only 3.5% down and more leniency with credit. FHA also allows us to go a little higher in ratios and doesn’t limit us to the 45%. I am not saying we can go over that just willy nilly. That’s not the case. We can go a little higher if, and only if, there are good compensating factors. And I bet you didn’t know this (well, unless you read the blog), City Living and Dakota Bond programs ONLY allow FHA loans or VA, no conventional. And don’t forget FHA and their guidelines in regards to disputed accounts. This just adds another item on the checklist of things we have to watch for in order to make sure you can get approved for a loan.
Enough already, huh? That’s all I have to say. There are just too many variables that if it’s something YOU can control, you should. You may want to check out our office blog titled Pain in the Assets – this goes over another important piece to your loan puzzle. With all that can go wrong in the loan process now due to guideline changes, title issues or bank issues, we need all the humor we can get, so hopefully you like our article. I’d love to do your loan right the first time by educating you BEFORE things become an issue.
Tags: City Living, credit, credit score, Dakota County, FHA, inquires, loan process, loan qualifying, pre-approval
Posted in First Time Buyers, Posts, The Home Buying Process, Tips & Tidbits | 2 Comments »
May 18th, 2010 by Darcy
Huh? What dispute? The one I am having with my roommate or with my parents about buying a home? You may have many disputes going on in your life. The one I am referring to is a dispute you started yesterday or 10 years ago with a creditor.
If you’ve been one to check your credit or maybe have had some issues in the past, you may have seen erroneous “tradelines” on your credit report. A tradeline is an item of credit — car loan, credit card, mortgage, student loan,etc. Now, if I were you I would be all over that like a bee to honey. I’d contact the creditor and “dispute” the inaccurate information. Wouldn’t you? The whole goal is to get the right things reporting on your report, not items that don’t reflect your score and ability to pay on time. True. BUT one little catch. Though you’re trying to BETTER your credit situation, you are actually making it harder to get financing.
Seriously? Helping your credit/disputing an account = tough time getting a loan. Tough to follow that logic,huh? FHA is the most popular loan right now and the most lenient when it comes to credit scoring, as well as only requiring 3.5% down. However, they have this little guideline that has been creating BIG issues for folks getting home loans. The deal is, if you have disputed an account on your report, regardless of what the dispute consists of, your loan guidelines just got stricter. Yes, your loan qualifications got tighter because you were trying to help your score improve. Does that make sense? Nope, not to me, but lately, many of the “rules” and changes have caused me to scratch my head quite often.
So, what changes with your underwriting guidelines? For one, your loan must be manually underwritten. 90% of my loans are run through and approved through AUS (automated underwriting system). Information about you in … decision on a loan for you out. Slick and easy. Your file is still processed, verified and still gets in front of an underwriter for the final stamp of approval. In a manual underwrite, it doesn’t matter what the loan decision is through the AUS. It’s no longer eligible for this to move to the underwriter faster and with more assurances of getting your final approval. It now has to be reviewed in depth and documented in depth in order for an underwriter to make a decision.
The rules to follow:
- Your ratios cannot exceed 31/43%. This means you cannot spend over 31% of your GROSS monthly income toward your house payment, OR over 43% of your gross monthly income toward your house payment and other monthly debts. This is concrete; no wiggle room here. We will use the lesser payment for qualifying when choosing the payment you can be approved for.
- We must get traditional VOE’s and VOD’s (verification of employment and deposits) So, even though you provided me with W2′s and paystubs, as well as bank statements, we must still get this information from a 3rd party. No fun especially since some banks and some employers charge a fee to give us that information. Unbelievable.
- We must do a VOR which is a verification of rent. Important that we confirm you make rent payments on time. Don’t worry if you’re not renting and with family; this won’t hurt your chances of getting a loan.
- The biggest one — you must have 2 months of reserves. In layman’s terms, that means after closing, you need 2 months of your PITI payment leftover. This can include retirement. Here’s the thing. Most first time buyers have a hard enough time coming up with their down payment or minimum investment depending on the first time program the buyer uses. Now you’re saying we need money left over? Yup and it hurts.
So how do you combat this? Well, there may be a way to work on getting the dispute removed. For instance, you could contact the creditor and tell them you don’t want to dispute the account any longer. About 30 days after you call, we can re-pull credit to make sure the verbiage “account in dispute” has been removed. It’s not an ideal situation, BUT, it would allow for a faster decision, more leniency on what you qualify for and NO requirement to have money leftover after you close, though there is nothing wrong with that!
The moral of this story — don’t wait to find a house to make an offer to find out you might have to wait due to this rule. Make sure you’re getting pre-approved with a lender that knows these guidelines and looks for them when reviewing your report. Also, there are people I can refer you to with regard to credit restoration if you’re in that boat. Let me help you get ready for the biggest purchase of your life. Knowledge is power and the more you know and can prepare for now will save a lot of headaches and stress when you do buy. I think you’ll have enough of that just from doing something new!
Tags: credit, credit score, FHA, first time home buyer, loan process, loan qualifying, pre-approval
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Tips & Tidbits | 2 Comments »
May 13th, 2010 by Darcy
| May 20, 2010 |
| 6:30 pm | to | 7:30 pm |
Oh no, the tax credit is gone! Why would I want to buy a home? A fantastic question that we will answer in this educational evening about buying your first home. Please join Steve Howe, Realtor MN Real Estate Team, and me, on Thursday May 20th to learn the steps involved in purchasing a home. The seminar goes from 6:30-7:30 pm and is located at the Cornerstone Mortgage office at 436 Gateway Blvd in Burnsville.
Our agenda is simple — to educate. Would we love to be your Realtor and loan officer … of course. Do we make you feel like you HAVE to use us — no. This isn’t a high-pressure seminar. It’s a relaxed atmosphere where we hope you will learn a lot, get your questions answered and be able to make good choices moving forward in this process.
We will talk about the process in the order you’ll go through it, starting with pre-approval and ending with getting the keys to your home. We will also discuss the available first time buyer programs and the many reasons why it is still the BEST time to buy, even without a tax incentive.
If you’re interested, please RSVP to clavey@houseloan.com as soon as possible. We’d love to have you and look forward to sharing our knowledge. Most importantly, come with questions!
Tags: credit score, first house, first time buyer programs, home buyer classes, home buyer seminars, loan process, loan qualifying, pre-approval, seminar
Posted in Assistance for Down Payment, First Time Buyers, Upcoming Events | No Comments »
May 12th, 2010 by Darcy
Where have ethics and morals gone in America? This is certainly a generalization as I know most of you reading this DO have ethics and a good moral compass. But then there are those people who don’t. Those people who “stated” income to get into a loan WAY above their means. Those people who falsified bank statements or W2s or even took another person’s social security number to get a loan. Those LOAN OFFICERS that suggested these things, suggested doing a 2-year ARM because they can sell in a few years, suggested the amount of income the borrower “needs” to qualify or suggested a way around the system. Now, due to this, we’re required to be licensed. Woohoo … I am sure that will stop people from advising inappropriately. And speaking of licenses, I officially passed the national exam — so be assured, I am “allowed” to originate loans. Gosh, I hope so after 16 years of doing this 
By the way, this is a long time coming and something I have supported. Stock brokers are licensed, as are Realtors. Why we haven’t been is beyond me.
Did I do stated income loans? Sure, I did a handful of them — literally less than five. That’s a very small amount. Did the people I work with falsify anything? I have no idea and don’t care to know. In the instances I can remember, I dealt with self-employed people who made WAY more than what they did on paper, ie federal taxes. The nice benefit of being self-employed is the write-offs. As lenders, we appear to penalize them for this. To some extent we do, but if you tell the IRS you’re making $40K after expenses, but you brought in $100K, then that’s the income — $40K. It’s a catch-22 for people who are self-employed. That’s why a stated income program worked. They’re now illegal in Minnesota and I would be hard-pressed to find a lender willing to do one. And I get it. Too many loan officers “coached” their clients. It’s wrong and it’s caused a world of hurt for the rest of us.
So here we are, in a huge financial crisis and the government is helping people in the above situations “modify” their loans so they can stay in their home. Don’t get me wrong. There are thousands of people who were “duped” into certain loan programs with the promise that their credit will improve in 2 years and they could refinance. This would have been sound advice if the market didn’t tank and values of homes hadn’t dropped. Now, these people can’t refi AND now can’t make a payment that has possibly doubled. How can you blame them? They were told about the best case scenario. This bugs me, as you can see.
I am a worry wart — don’t want people upset at me or to come back and say “you told me” and have them in a tizzy over advice I gave. A few years ago it was practically a requirement to buy a new home NOT contingent on the sale of your old home. As lenders, we had to count the debt of the OLD house and the NEW house for qualifying. This makes sense. But, reality is, how long can someone make 2 house payments? At some point, just giving up on the old house is easier to do if times get tough. Heck, it’s not the roof over their heads now. They still have a place to call home. I was very upfront with buyers about the potential hazards of doing this. Ultimately, it’s the buyer’s decision, but I lay it out there — the good, bad and ugly. And speaking of ugly … in “those” days, if you had a signed lease agreement, you had income we could use to offset the old house payment. I did a loan where I was given 2 leases for a duplex the borrower owned. We followed guidelines and used 75% of the rent for qualifying so he and his fiance could move into their new home. These kids were referred to me by a friend — a loan officer friend that had knowledge of their intent to let the house go. I found this out about a year later. To this day, I have no idea if the leases were legit and the renters finally decided to move. Not a clue. And I just don’t want to know.
It’s disturbing to me that I had a part in a loan like that. I didn’t have the knowledge of the end result, but it makes me feel icky inside that I trusted. And as my husband will tell you, I trust a little too easy. It’s my nature to assume you’re being honest unless I see or suspect differently. Had I known their intention for letting the house go … I would not have done the loan. My conscience would not have let me. It’s funny, but we have a disclosure, required by the federal government, that states mortgage fraud is bad, prosecutable to the tune of 30 years in jail and/or one million dollars. So, what’s funny about that? The fact we have to “tell” people fraud is bad and not only that, people will still commit it — doesn’t matter if they sign a piece of paper warning them of the consequences. Unbelievable.
So the moral dilemma as I see it — should we pay our mortgages on time, like we’re supposed to or do we get help from the government for NOT paying them on time? Hmmmm, reinforcing and going as far as rewarding bad behavior. I don’t get it. Here’s an article that speaks to this too. I’m not the only one in this conundrum. And here’s what’s really sad. Over 50% of those people that modified their loans have already defaulted. Oh yippee. That means the government helped subsidize the rate to make the numbers work, paid the lenders a fee to do these types of loans and offer the client a cherry rate. And what for?
My soapbox is getting slippery and I know views like this shouldn’t be put in blogs, but I feel so strongly about this, about the way the government has handled the misguided, misrepresented and possibly fraudulent buyers that are getting a pat on the back for going against what’s right – disregarding their debts. As a landlord of a rental unit (used to have two), I am amazed and shocked how many of our tenants pay late or not at all and expected us to deal with it. How dare us assess a late fee, blatantly addressed in the lease. When I rented, I paid my rent. If I didn’t, I was kicked out. It was that simple. I was taught that paying what you owe is honorable, ethical and the right thing to do. It’s how I was raised. It’s how I will raise my children and how I will continue to advise my clients. Because these are the right things to do — no moral dilemma on this front.
Tags: 8000 tax credit, federal stimulus, loan officer, loan qualifying
Posted in Posts | 2 Comments »
May 8th, 2010 by Darcy
As you may know, once or twice a month I’m part of the MN Real Estate Show on KTLK 100.3 FM with the MN Real Estate Team and WE Team . Our team, MN Home Loan Partners, has been a part of these awesome teams for over 4 years.
The show is a great way for you to learn about the current marketplace, where rates are at and even call in to ask your questions. Though we plan to discuss “To-Don’ts” and “Vested Interest — What’s in it for Whom after the Dust Settles” today, it’s really your calls that make the show what it is. We are more than happy to get off topic or never even hit the topic to take calls. Our number is 800-396-0406.
Hope you can join the guys, Ryan and Scott, Kelly (our fabulous host) and me for an hour of real estate and mortgage talk.
Have a super weekend and for all you Mom’s out there — Happy Mother’s Day!!!
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May 4th, 2010 by Darcy
You may have heard that it’s getting harder and harder to qualify for a loan. It’s true. Though things have lightened up a bit, some old rules have come back into play, as well as new rules are being enforced more than ever. For the most part, I am referring to FHA financing below as they are the most lenient when it comes to qualifying for a home. More than 95% of my clients use this loan type due to this, the lower down payment requirement and the ability to receive a gift.
These days, what do you need to know with regards to credit requirements?
- Your credit score must be 620 or higher. The line is drawn in the sand on this one — higher requirements for conventional financing.
- You must have THREE tradelines* with at least 12 months history.**
- If you have ANY disputed accounts, we MUST manually underwriter your file, per FHA.***
- Judgments and liens must be paid in full prior to or at closing.
- With FHA, collections do NOT have to be paid off.
- With FHA, student loan payments DON’T have to be counted in the ratios for qualifying IF they are deferred and we can get proof they won’t start until at least 12 months after your first payment is due.
For the most part, these are the main things to know about credit these days. So you know, first time buyer programs aren’t programs that allow anybody, such as people with bad credit, get a loan. You first have to qualify for a mainstream loan, like FHA, VA or Conventional. Once you’ve passed their muster, then we look to see what first time programs meet your situation in terms of income, household size and location.
And some tips for dealing with your credit? If you want to buy a home, you need to watch a few things:
- Make your payments on time — period.
- Bring your credit card balances down to 50% or less of the available credit.
- Don’t apply for new credit or have your credit pulled.
- Don’t consolidate credit cards.
- Definitely don’t close accounts, whether you use them or not.
- Don’t pay off collection accounts unless your loan officer advises you to (if you pay off an old account, it could negatively affect your score)
Certainly, if you have any questions, don’t hesitate to contact me. It’s best to talk about what you want to do with your credit PRIOR to doing it. Easier to “fix” a potential problem before it happens. Once it’s done, it’s done.
*Tradeline is an item of credit on your credit report. It can be a credit card, house payment, car payment, student loan or another type of installment debt. Collections and derogatory credit don’t qualify as a tradeline.
**Some first time buyer programs defer to FHA standard rules and don’t require the 3 tradeline minimum or 12 month history. Check with a first time buyer expert (like myself 
) to see what you can do if you don’t meet these parameters.
***Most loans are run through an automated system to get an answer and all still get seen by an underwriter for final approval. However, if there is a disputed account, the automated system isn’t acceptable and an underwriter MUST look at the file and stick to standard FHA guidelines.
Tags: credit score, first house, first time buyer programs, first time home buyer, inquires, loan officer, loan process
Posted in First Time Buyers, Posts, Tips & Tidbits | No Comments »
April 30th, 2010 by Darcy
Do you know the answer to this? Have you thought about the responsibility that comes with homeownership? It is nothing like renting. You can’t just call the supe to come over and fix the clogged sink or make a call when your neighbors are too loud. It’s a really big deal this thing called homeownership.
In a recent survey, the main reason first time buyers bought was an affordable market. The two reasons that followed were the tax credit and the low interest rates. Now, today is the last day you can take advantage of the tax credit. As you have heard over and over, you need a signed and accepted purchase agreement by today AND must close on your new home by June 30th.
Honestly, how did you answer the question above “Why are You Buying a Home”? Was it because you could get an $8000 tax credit? As much as I hate to say this, if your answer to this was yes, you’re not alone. I have talked to so many people in the last 12 months that decided to buy because of the money the government was giving away. My advice to them — great incentive to get out and start looking, but only purchase if you’re ready AND completely understand what you’re getting into. I just tweeted that it’s better to have “lost” $8000 vs. $80,000 or more due to a bad judgment on buying a home just to get the credit.
Here’s the thing. Yes, the money will be gone and that’s a bummer. I can’t help you there. BUT, what I can do is offer up the other two reasons people bought this year — affordability and low rates. Seriously, this couldn’t be a better time to buy. As we discuss weekly on our radio show, MN Real Estate Show on KTLK 100.3, this market is going to be here a little while — at least another 2-3 years. Home prices are not going to rebound fast because we have more foreclosures to get through. With that said, homes under $250,000 are still being gobbled up fast if they’re decent homes. Regardless of that, you have the lowest prices to purchase at in record years.
And what about low rates? I don’t have a crystal ball — wait, I DO have a bouncy crystal ball, but it doesn’t help me predict the future. I wish it did and I wish I had that ability. What I do know is that there are PLENTY of first time buyer programs out there with down payment assistance and lower-than-market interest rates. I have access to them all, PLUS, we do a few other things that most lenders don’t. For instance, in one of my blogs I talk about the 203K loan with FHA. I noted in the paragraph above that homes are gobbled up if they’re decent. What about the less-than-perfect homes? As a first time buyer, it’s tough to afford a home and then on top of it have money to do work. This is your BEST opportunity to make the house “yours”.
These are all great reasons to buy a home. And there are more, such as no longer paying another person’s mortgage by renting. May as well put your money into something that will appreciate — though that will take a little time, it’s still a better investment. There is something to be said about having your own place. Downside is you will have more expenses, maintenance, including furnishing and decorating. These are all things to consider. But, it’s yours. Not someone elses. You can do whatever you want to the house. You don’t have to answer to anyone. It’s the pride of ownership and that alone is one of the best reasons to buy in my opinion!
Then there’s the “tax credit” you get. No, not speaking of the one that expires today. That would be silly. I am talking about the tax benefit of owning a home. Most of you probably don’t get to write off any expenses, like the donations you give of stuff or money. Wouldn’t it be nice to get a benefit from that? As a homeowner, each year you can itemize all of the interest you pay on the loan and all the property taxes you paid that year. Did you know, you can also itemize the state income tax that you pay? Nice benefit there. I don’t want to mislead you. Not everyone will get this tax benefit, or I should say, be able to utilize it. If the loan size is smaller, along with lower rates, you may not have enough itemized deductions to EXCEED the standard tax deduction listed on page 2 of the 1040′s. And that’s okay. Sometimes not paying a lot for a home loan is a really good thing! There’s more to this and I am happy to explain further your benefits based on your situation.
So, the question still stands — “Why are You Buying a Home?” I’ve given you plenty of reasons that still make sense even though the tax credit is expiring. My hope is you have other reasons for owning. But as I said earlier, it’s NOT something to enter into lightly. As a matter of fact, the best advice I can give you, short of coming to one of my seminars , is to go to a Homestretch Course. This will not only teach you most of what you need to know when buying, but also what it takes to maintain your home after it’s yours. Also, this will meet the pre-requisite to be eligible for most of the first time buyer programs. Look at that — kill 2 birds with one stone — learn about homeownership AND qualify for down payment assistance. And who doesn’t want interest-free money and lower rates? Sign me up 
Tags: 203K, 8000 tax credit, City Living, Dakota County, down payment assistance, first time buyer programs, first time home buyer, home buyer seminars, rehab loans, tax credit
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process | No Comments »
April 29th, 2010 by Darcy
Are you buying your first home? How has your experience been so far — with the realtor, loan officer, even the listing side? What have you heard about the home buying process? Is there just one house out there for you or could there be more? Good questions to ask yourself as you go through this unknown and possibly long process.
I can tell you that everyone’s experience is different. That’s just the nature of the beast. But, because this is such a personal decision, you really want to make sure you’re working with people you can trust and actually like. I know this may sound silly. I have known people to buy big ticket items, including houses and not like who they worked with. Gosh, I hate to say it, but I fell into this category once.
About 9 years ago, I went to buy/lease a car at Lexus. Now, I drive a mini-van — nature of the “mom” beast!! Anyway, we only have 2 options in the MN area for Lexus — I chose the closest one to test-drive on December 31st for their “December to Remember” event– so I was under the gun to BUY before January 2nd. I test drove a car with a salesperson who I am happy to say is no longer there. I found the car I really wanted, but needed to negotiate the buyout of my other car — I got an estimate from them, lower than what I KNEW I could get. I was determined I was going to buy a car THAT DAY, so I brought my husband for his seal of approval. I had the price of the new vehicle just where I wanted it — now for my trade. A heated discussion ensued between my husband and the used car sales manager about HOW they determined the price — Kelly or NADA. Oh, what a night of poor behavior on both parties, even me for not standing up to the rude behavior. To end it all, the salesperson yelled us out the door saying he never wanted to see him in the dealership again — real professional!
My husband was walking … but I wanted the car. Being a person of great determination and getting my way, I actually went back to the dealership on January 2 and bought the car. Yes, I bought the car. I was blinded by my desire to have THAT car, that it didn’t matter how they treated my husband or us. Looking back, I am ashamed I let something cloud my judgment and my ethical standards. To this day, that whole deal frustrates me. I know how people in sales and the service industry should behave. Though the customer isn’t always right, they deserve to be treated with decency, care and the utmost respect. We were NOT respected and I still went through with the deal.
Okay, so where am I going with this? A car purchase is NOTHING in relation to purchasing a home — a VERY big financial decision. It makes ALL the difference in the world to not only like who you work with, but who you trust. As first time home buyers, many Realtors and loan officers don’t “have the time of day” to help you. Maybe your price point is too low or your knowledge is less than a previous home-owner that they don’t want to INVEST in something that may not reap financial rewards. I know loan officers AND Realtors that have this mindset. I do NOT do business with those Realtors. I want someone who shares my similar values and philosophy — doesn’t matter what price, loan amount or what type of knowledge you have. It is my responsibility to serve you, to educate you and make sure you are comfortable with the process — a process that can be scary and can be blinding by the new “shiny” house.
So what does love have to do with it? EVERYTHING! You don’t have to “love” the people you work with, but you definitely have to enjoy and trust them. Another point of all this — I bought a car from someone who didn’t care about me, who treated me and my husband with disrespect. A car … how many of those cars are out there? I had options. I did NOT have to buy from them. With houses, this is the same. You may fall in love with a home that is perfect for you and your family. It just may be, but what you need to understand is there are other homes out there. This isn’t the ONLY home that meets your needs. The Realtor your working with isn’t the only Realtor out there that can help you. I am aligned with so many AWESOME agents that really do their job for you. That’s why we’re here. Sure, we make money and sometimes not enough to cover the time invested. BUT, it’s not always about the money — it’s about providing a service with our expertise and show you that we care, that we love what we do and we would like you to love the experience.
There you have it. So, if you’re in a ”bad relationship” with your Realtor or loan officer, don’t give in. Don’t think that you can’t do any better, that you have to settle. I’ve done that and it feels horrible. Nine years later I remember that experience like it was yesterday. Just think if I was LIVING in that house that someone sold me that wasn’t my best fit or the payment was really out of my range? Now how do you think I’d feel? LOVE the characteristics, knowledge, personality and personality of the people you invest your time with to spend the most money you have ever spent before!
Tags: first house, first time home buyer, loan officer, loan process, Realtor
Posted in First Time Buyers, Posts, The Home Buying Process | 1 Comment »
April 13th, 2010 by Darcy
That all depends on who you ask. The first time buyer tax credit ends on April 30th. What exactly does that mean? Do you have to close on a home by that time – because that’s only 2 weeks away and you’d be hard-pressed to do that.
The reality is you just need an accepted purchase agreement by the 30th of April. So, that gives you 2 weeks to look at houses and make offers like homes are going out of style. Houses are moving quickly, especially in the first time buyer price point — under $250,000.
So what do you need to get that offer accepted? Most importantly, a SOLID pre-approval. These are tough to find. Many lenders aren’t able to stand behind their pre-approval letters. We can and we do. If you haven’t given your lender your W2s, federal taxes, paystubs and bank statements, you haven’t been fully pre-approved. Your lender is just “assuming” the information you provided is accurate. Proof of these things is crucial to make a backable decision — as is running your loan through an automated system.
Okay, so you have the pre-approval. Have you been informed of all the first time buyer programs that are available to you or is your lender just brushing off their importance? Lately, I have had so many people ask how they can get down payment assistance, but they’re pre-approved. Weird, since their lender should be telling them about ALL their options. Have you had this happen yet? I hope not. These programs may be able to help you get into a home sooner than later too.
The other important date … June 30th. This is the date you need to close by. Another important reason to make sure you’re working with a reputable lender. Seems like this isn’t a problem, it’s over 2 months away, right? Some lenders aren’t getting things done in a timely manner. If you have your pre-approval figured out ahead of time, then it’s a quicker process once you’ve found the home.
Long and short, you’re not too late. You just need to make sure you start looking now. Oh, and not only is your pre-approval important, but so is the Realtor you choose. Realtors play a huge part in whether this $8000 can become a reality. Are they looking for homes every day within your search parameters? Are they having you act immediately on homes that interst you?
There’s a lot to this puzzle. It can easily be put together if you have the right corner foundations — reputable lender, knowledgable Realtor, backable pre-approval and desire to be a homeowner! All the other stuff will fall into place. As long as you make the efforts to be open to looking daily, willing to take the advice of your Realtor and are willing to supply all paperwork required by the lender in a timely manner.
So, let me know what I can do to help you reach that pot of gold at the end of the home-buying rainbow — more importantly, give you all the pieces you need to complete your home purchase! And if we’re lucky, we can help you get that $8000 just for “showing up” to buy a home.
Tags: 8000 tax credit, down payment assistance, first time buyer programs, first time home buyer, pre-approval
Posted in First Time Buyers, Posts | 3 Comments »
March 21st, 2010 by Darcy
As you may know, there are so many things available for first time home buyers — ending soon is the federal tax credit of $8000. You need an accepted purchase agreement by the end of April and must close by the end of June. There have been lower rates and of course, plenty of first time buyer programs. One in particular is the Ramsey County FirstHOME.
If you’re looking in Ramsey County, or I should say, the “suburbs” of Ramsey County, you could take advantage of a great opportunity. If you’re looking in the city of St. Paul, then there is a different program you may be interested in — the CityLiving program. But, if you want to live in one of the many cities* of Ramsey County, this may just be the program for you.
Available as an interest-free loan, is up to $20,000 that you can use toward closing costs and down payment. There’s a few ways you can use this money to your benefit. One, is to help your buying power. The $20,000 may allow you to afford a larger home or higher sale price. Speaking of sale price, the maximum purchase price on this program is $200,000. Or, two, you could keep the price range you’re pre-approved for and bring your payment down. Not a bad deal. Did you know that for every $10,000 in price, it’s about $70/mo in your payment?
There are a few guidelines that are specific to this program. Like all first time buyer programs, there are income limits. These income limits take into account the total income from the household, not just from the person on the loan. This even includes children 18 years or older that are working. Along with this, there is a requirement that you have at least THREE years of working full-time. The FirstHOME program is not a solution to help first time buyers coming right out of school to qualify for down payment assistance. A year or so ago, a GREAT change occurred to this program — you no longer have to WORK in Ramsey County to qualify, which opens a lot of doors for more people to qualify.
You must attend the first time buyer Homestretch class overseen by the MN Home Ownership Center. Even if you didn’t have to take this 8-hour course, I highly recommend it. It will go over everything from the process with your loan, buying the house and even talk about “what ifs” as you’re a homeowner, such as foreclosure prevention. And hopefully, with guidelines that are getting tighter and tighter, you won’t have the opportunity to get in ‘over-your-head’ with a house payment. Trust me when I say, this is never my goal. Sure, I want to help you get the house you want, but it should never be a the expense of you not being comfortable with or able to make the payment.
An interesting requirement for the FirstHome program has to do with ratios. Ratios are a certain percentage of your GROSS income (pre-tax) that we can use toward your house payment (housing ratio) or your house payment and your other monthly debts (debt ratio), which ever is less. For all practical purposes, we are limited to keeping your debt ratio under 45%. In order to be eligible for the assistance, your “housing” ratio needs to be OVER 30% of your gross income. The purpose then, for the assistance, is to bring your housing ratio down as close to 30% as possible. If you are under 30% to start, then this program won’t work for you 
.
Wanna know something else that’s cool with this program?? How about the ability to use this WITH the MN Housing program, where you not only can get a lower-than-market rate, but also could qualify for another $5000. Yes, another $5000 — you could receive a total of $25,000 to use for your new home purchase. Wowsers!
Anyway, this is a super program! Let’s see if you can make these monies work for you while you’re still a first-time homebuyer. If you want further information, please don’t hesitate to give me a shout or email. I am here to help.
*Cities eligible for the program:
Arden Hills, Falcon Heights, Lauderdale, Little Canada, Maplewood, Mounds View, New Brighton, North Oaks, North Saint Paul, Roseville, Shoreview, Vadnais Heights and White Bear Lake
Tags: City Living, down payment assistance, first time buyer programs, first time home buyer, home buyer classes, loan qualifying, pre-approval, Ramsey County
Posted in Assistance for Down Payment, First Time Buyers, Posts | 2 Comments »
March 16th, 2010 by Darcy
As much as I’d like to say pre-approvals are all the same — they’re not. Though you can buy the same pair of jeans at numerous stores, you cannot get the same pre-approval from numerous companies. So why not? If an FHA loan is an FHA loan, then I should get the same product anywhere I go, right? Not so much. The thing is, it’s more that all lenders aren’t created equally, meaning you won’t get the same answer or loan suggestions from everyone. Also, many lenders don’t have access to the first time home buyer programs. Due to this, you may very well be steered into a program that may not be right for you OR you may be steered away from those first time programs because they’re “too much work”. Cry me a river.
The question remains, why aren’t pre-approvals the same? A pre-approval means different things to everyone. For instance, one lender may see the pre-approval as just running your numbers over the phone, pulling credit and then issuing you a pre-approval letter. What’s wrong with this picture? Isn’t this what pre-approval means? Nope. The reputable lenders, me included , realize there is a lot that goes into saying “you can buy a house”. Yes, we need to run numbers and yes we need to get credit; there is still much more to do. Your loan must be run through an automated underwriting system (AUS). This is a program with a million different checks and balances to identify risk or maybe conclude it isn’t a risk at all. We can run FHA, VA and Conventional loans through this system. And, it’s HIGHLY advised. Sometimes the program alerts us to something we missed, such as an issue in credit that’s pages down in the credit report and we missed it. Other times, it helps us pre-approve a buyer that may not have qualified otherwise. For instance, let’s say the normal guideline is to take 41% of your gross monthly income toward your debts and proposed house payment. Maybe this is a bit limiting for what you’re looking for. Looking at your credit and assets, I can determine that you are well qualified to extend yourself a bit. (NOTE: I am not here to increase your payment just so I can do a bigger loan. You need to spend what you feel is comfortable.) After I run it through AUS, I may get an approval up to 45% of your income. This just made it so you can afford a larger loan amount and possibly the house you want. If the payment is something you can live with, then off to the races we go. If not, then let’s chat about where you want to be. Ultimately, this decision should be driven by a budget — something that lays out what you owe and what expenses you have monthly in relation to your NET income (after taxes). You know, things like clothes, dinner out with friends, a $4 cup of coffee every Monday and Friday, or whatever. It’s crucial to budget.
Okay, so now you know we need to have the loan run through the automated system. Now what? We’re all human. There is that element of imperfection — typing something wrong, from income to assets — the information is only as good as the accuracy of the data entered. The next part of the pre-approval is gathering documentation for your loan, paperwork that supports what you supplied on the loan application. I have had this happen before — a client told me he worked an extra 4 hours a week in overtime. I confirmed verbally that this has been going on for the last 2 years (need a history of this type of income). He stated that 4 hours was on the low end and sometimes it’s more. To be safe, I used the lesser number to avoid a possible inaccurate pre-approval. It was crazy when I finally got the paystub and low and behold, overtime didn’t really exist at all! Either he’s not telling the truth (and I always give the benefit of the doubt) or the company isn’t paying him as they should be. Turns out it was the latter. Bummer, huh? Needless to say, my income was off, so it was putting a damper on their qualifying power. We had to adjust their searches down. As simple as this may seem, it’s not. I liken it to buying a TV. Let’s say your research shows that based on your savings, you can afford a 27″ TV (do they make those anymore??). You head over to the “big box” store and right there, first thing you see, is a beautiful, crystal clear 32″ LCD TV. Now, I don’t know about you, but that TV is going home with me TODAY! I’ve seen what I could have (if I could afford it) and know that’s what I want. Looking at the piddly 27″ TVs just doesn’t cut it. This is the same experience with buying a home. If you’re looking at homes in a higher price range and then come to find out you don’t qualify that high because your paystubs don’t support the higher income, you’ll be disappointed. Nothing compares to the home that was $20000 more than your new approval amount. And the truth is, nothing will compare. It’s tough to wean yourself off something so much nicer, bigger or what-have-you than what really works in your budget. It’s critical that your lender gets this documentation ahead of time before you start looking. No sense getting your hopes up for something that isn’t obtainable.
Okay, so now we know the AUS system has pre-approved your home loan and your documentation supports that — now what? How can the pre-approval differ if the lenders are playing by the same rules? Another great question. First, not all lenders know what to look at with the documentation or how to even calculate your income. Sad to say, but true. And, not all lenders are supported in the back end to fulfill their commitments to your pre-approval. Anyone can say you’re pre-approved; but can they actually process your loan in a timely manner, underwrite the file in-house AND fund the loan on time locally? Not many lenders can say this. The “big box” lenders are having a very hard time getting deals done in a 60-90 day window. Don’t get me wrong; they can be great lenders. It’s tough to give great customer service and attention when there are so many pieces of business coming in — too much they just can’t handle it. Truth be told, some lenders, more specifically loan officers, just flat out lie. Many years ago, the lending industry got an “escape” clause if you will. Essentially, per MN Statute, the pre-approval and the full approval are NOT guaranteed since things may change. Remember the stuff you shouldn’t do while in the home-buying process? People do those things, such as quitting a job a few days prior to closing. I mean really, you couldn’t wait 2 days? It was just that bad? He didn’t think it was an issue — we had him approved and ready to go. Bummer is that investors are requiring a verbal verification of employment within 5 or even 3 days of closing. We MUST call your company to make sure you still work there. You can imagine our surprise when the answer was no. He was stuck — closing supposed to happen in 2 days, no job, no loan. We did the only thing we could — wait until he got the job. Since this wasn’t my deal, I have no idea how the listing agent/seller reacted to this big delay. My guess is they weren’t too happy. Can you blame them?
And last, the company, and/or the loan officer, can make or break whether that pre-approval is just a piece of paper with no value. There are a few good loan officers out there that do the right things to insure you are actually pre-approved for a home loan. Then there are those who somehow survived all the changes and still don’t have a clue how to read a paystub, let alone ask for one. It’s common sense. If someone mentions that they get paid tips a huge flashing light goes off saying “Verify Income” sooner than later. Why? Well, tips vary and we need a 2-year history of earning them to use that type of income to qualify. Oh and those tips that don’t make it to the W2 or tax return … can’t use them. You will find that Realtors who have been around a long time, know and recognize those lenders and loan officers who perform with their pre-approvals. Admittedly, I made a mistake last summer using alimony income. I took the word of the borrower that it was consistent, month after month she was receiving it. When I received the bank statements to confirm the stability of this income, I failed to look closely for the consistency. When the underwriter can’t see a pattern, it’s really tough to use the income. Holy cow did I learn my lesson by doing a loan that was completely free – no income for my company and no income for me. But that’s what you do … stand behind your letters and do what you say you’ll do. I put it out there and I will make it happen. You need to find a lender that will do that — of course, I would love to be that person for you!
In a nutshell (of say 1600 words or so 
), you can see that more things go into a pre-approval than just “running your numbers” on a calculator and calling it a day. Knowing the lender you work with is so important. The Realtors I work with are number one in the Minnesota area and realize the importance of working with someone who can perform, even if the audience did pay for the show! Be cautious and be certain that you work with the best lenders who come through, day in and day out. It’s not just a piece of paper that is the same no matter who you work with; it’s truly the “ticket” to whether you get on the home-buying train or have to get off right before your destination. No fun being dropped off in the middle of nowhere with nothing to do but start the journey over — assuming you can find a ride that can get you there. Hope to help you get there soon!
Tags: first house, first time buyer programs, first time home buyer, homeowner's insurance, loan qualifying, pre-approval
Posted in First Time Buyers, Posts, The Home Buying Process | No Comments »
March 12th, 2010 by Darcy
Last weekend on the radio show we co-host with the MN Real Estate Team and WE Teams of Re/Max, I hosted a fun and informative segment. Our regular hosts, Ryan O’Neill and Scott Wollmering, were in Florida winning awards from Re/Max. It was my normal week to be on the air, but I got a bonus … running the show. Kelly and I presented a busy segment. Luckily, we had you, the public, call in and make our show way more interesting than we ever could have on our own.
Needless to say, we still needed a topic so we weren’t just babbling away for an hour live on air! I invited a couple of awesome Realtor partners to join in our fun to help educate our audience. My partner in crime with the first time buyer seminars, Steve Howe, was there to enlighten the audience on first time buyer topics. We also had Zach Skattum “in the house” talking about the ever-so-popular REO sales — real estate owed, aka foreclosures.
On Saturday, our topic was ”B’ Bye or Buy Buy”. It was all about what was going away, or going Ba Bye in the near future making it so you should Buy Buy. The tax credit is going away the end of April. As a first time buyer or repeat buyer, you need to have a signed and accepted purchase agreement. Here’s a cool thing. If you’re brave and make an offer on a short sale, you only need to have the seller sign off on the offer. You do not need the bank to sign off in order to meet the April deadline. The main caveat is that short sales still take awhile, so there is no guarantee that you will get your sale closed by the second part of the credit requirement — closing by the end of June.
Another thing that is going “B’ Bye” — low interest rates. Back in January of 2009, the Federal Reserve began a plan to purchase $1.25 trillion dollars of mortgage backed securities (MBS) in an effort to keep the housing market afloat. Trillion? How much is trillion? That is such an incomprehendable number to me. Anyway, MBS’s are bonds backed by mortgages. Who knew? If the bonds sell low, then rates go up. Invertly, if bonds sell high, rates go down. So, with the Federal Reserve buying bonds, they’re selling high, keeping the rates artificially low. During the first week in March, the Fed had already purchased $1.2 Trillion. At the end of March, they are supposed to be tapered down to zero — no more buying of MBS’s. With that said, rates are anticipated to rise — to what level, we don’t know. The guess is somewhere between .5%-1%. And no one really knows when that will happen. Will it be immediate or lag a little? A lot of uncertainty.
So, with these to LARGE ticket items waving B’ Bye, it’s definitely time to ” Buy Buy” a home. You don’t want to miss out on free money from the government for the tax credit and for sure you’ll want to take advantage of the low interest rates. Remember, these are at an all-time 40 year low. It’s just not going to get better than this. Now, partner these up with some incredible first time buyer programs and low home prices … and you’ve got the recipe to “Buy Buy”. Don’t miss out!
Tags: 6500 tax credit, 8000 tax credit, down payment assistance, first time buyer programs, mortgage backed securities, tax credit
Posted in First Time Buyers, Posts | No Comments »
March 3rd, 2010 by Darcy
Ahhh, the market. The market that is flooded with foreclosures — some that are in decent shape, some that are stripped of anything of value and homes that fall somewhere in between. Here’s the dilemma that many buyers are experiencing … how do I buy that house when the lender won’t finance it due the condition it’s in? There’s a great question. With so many opportunities to get a great deal on a house right now, use first time buyer money and take advantage of a 40-year low in rates, how can anyone “make it happen”?
It’s called the FHA 203K loan. A little background first on where the mortgage market is now. Most buyers are using FHA financing, which stands for the Federal Housing Administration. The main reason is the minimum down payment requirement of 3.5%. Another reason for its popularity is being the closest thing to a “sub-prime” loan. Now, I am not saying it’s like a sub-prime loan in the true meaning of it. It is, however, the most lenient loan on credit score requirements. You need a minimum mid-score of 620. Conventional loans recently came back to the marketplace with a 3% down loan in part due to the PMI (private mortgage insurance) companies are willing to insure them. To do 3%, you must be a first time buyer and in most instances, need scores over 700. My experience these days supports that score being tough to come by.
Since most buyers are using FHA financing, many are unable to get offers accepted on foreclosed properties with any work that needs to be done. Why? A few reasons. First, FHA is a little more strict on safety and structural issues with the homes. When we send an appraiser to the property, they’re supposed to look for those things that could pose a hazard, such as missing cover plates on outlets, or the biggest one, peeling paint ANYWHERE in/on the home if the house was built before 1978. Those homes have a higher chance of the paint being lead-based. If you eat the paint chips, you could get sick — too many, like a little kid might, and you could die. That’s scary and that’s why FHA is very clear on their position. So, if any issues are found, they must be fixed prior to closing on the home Second, many banks won’t accept FHA financing. Due to the amount of work potentially required by an FHA appraiser, they don’t want to have a deal fall through if an FHA appraisal comes in with work orders. In 99% of the cases, the bank won’t fix the issues. Banks are known for selling the home “as is” and really, this makes sense. They never lived there, so they really can’t comment on water damage or storm damage or stolen fixtures. Yes, some people DO take the toilet and sink. Seriously, what are they going to do with that stuff? Nothing, I would assume – it’s just a way to say “I’ll show you bank for taking my house away”.
So, if the bank won’t accept FHA financing and most people are buying this way, how can these foreclosures be sold? The financing that can handle this is called the FHA 203K loan. Under this program, there are two sub-programs, the streamline 203K and the full-blown 203K or “K” as I call it. This is a rehab loan that would allow you to get into a home BEFORE those repairs are completed. The repairs would be addressed in a bid which is added to your loan size. There are only a handful of companies that do these loans, mostly because they are labor-intensive and carry a lot of risk. Cornerstone Mortgage has been doing this for years and understands the niche that is filled by doing the rehab loans.
As I mentioned, there are two sub-programs. The streamline “K” is a more condensed rehab loan. The maximum addition to your loan size is $35000 including the “K” costs. The main difference with the streamline vs. the full-blown “K” is that you cannot do any structural or foundation work on the streamline. You can paint, carpet, replace the furnace, add A/C, change lighting, add a bathroom, do the roof and even something that isn’t re-habby at all like buying appliances. Most importantl, you can fix those items that are required by the appraiser to bring the home to FHA standards. Another REALLY cool thing about this streamline “K” is that Cornerstone CAN do a smaller version of this in conjunction with the MN Housing Finance Agency loan (max $15000 including “K” costs) and you could still get $5000 in assistance. We can do the the regular version with both the City Living and Dakota County programs, which are programs that just received a big chunk of money at a low rate. And speaking of rates, if you don’t use a first time program, then the rate on the 203K loans will be about 1/4 – 1/2% higher than a normal FHA loan. Trust me when I say, this is a screaming deal even at a little higher rate.
The second sub-program is the full-blown “K”. The loan amount that can be added to your primary loan is UNLIMITED, assuming two things — 1) you can qualify for the loan and 2) you stay under the FHA loan limits, which in the 11-county metro area are $365,000. In this rehab program, you can do anything — like items mentioned above, doing an addition to the home and get this, even tearing down a home just as long as you re-build on the existing foundation. Yes, seriously. Of course, you’d have to get that home pretty darn cheap to keep a new home build under $365,000.
You may be thinking, ‘this is cool, but how do I qualify for this?’ Are there any special requirements? Nope, not really. You need the 620 score or higher, need to be able to qualify for the higher loan amount and need to do a little extra in terms of paperwork and hiring a contractor. We have a team of awesome contractors that are ready to give a free bid based off what your needs are and what the inspection may bring to your attention. We don’t require you to use our preferred contractor partners, BUT, we highly recommend it. I can tell you stories as to why another time!
Okay, what’s the process? More than likely, you won’t be looking for homes that need the work. But, the appraiser may just require that work has to be done and now the 203K program becomes a necessity. Essentially, you locate the home, make an offer using the 203K (since many bank-owned properties won’t accept regular FHA financing), we have an inspection and potentially have the contractor out there with you to assess the scope of work and provide a written bid. This information goes to processing with your file and an appraisal is ordered using the purchase price PLUS the bid. The home will be valued “as-is” and also given an after-repairs value. Here’s an example of built-in equity. I helped finance a townhome that just required new flooring throughout and then the client decided to get appliances (were none in the home) – home price was $115,000, bid items added up to $13000 — it appraised at $150,000. WOW, that’s awesome. The work, not that extensive at all nor value-enhancing per se, just brought the home to a level playing field with the other townhomes that are in good shape.
There is more to the process, but I see that this post has become quite long. You can wake up now!! To summarize, you DO have a way to do an FHA loan and still purchase a home that needs work or is bank owned. We have the opportunity waiting to help you and I do profess that this is one of those programs I have done quite a bit and with great success. I hope I can help you make the house you’re buying a “dream home”.
Tags: 203K, down payment assistance, FHA, first time buyer programs, loan process, rehab loans
Posted in First Time Buyers, Posts, The Home Buying Process | 3 Comments »
February 27th, 2010 by Darcy
| March 15, 2010 |
| 6:30 pm | to | 8:00 pm |
| March 18, 2010 |
| 6:30 pm | to | 8:00 pm |
| March 25, 2010 |
| 6:30 pm | to | 8:00 pm |
Another month, another seminar frenzy. It’s all about you — it’s in my Vision for You and truly is part of who I am. To me, education is key to owning your first home. Sure, I want to help you navigate through your first financing experience on a house. The Realtors I work with want to help you find your very first house. Business is business, right? Partly. As a team, we have an alterior motive — we want you to be as prepared as possible for buying a home. So, to this end, I dedicate three nights a month to first time buyer seminars with the help of some very awesome Realtors.
So, what’s in it for you? My hope is that you will walk away with a greater understanding of what the process is, how to get started, what programs can help with down payment assistance and other information to understand what you’re “getting into”. There are many people out there, maybe you included, that have a desire to own a home, but hang in the shadows due to fear, credit challenges or even stories about your friend’s bad home-buying experience. With something so big as buying a house, you do not want to go in blindly, not to mention work with people that don’t have the market knowledge and extensive resources for assistance. This process should be educational, stress-free and believe it or not, fun! I get reminded quite often while talking to people refinancing that lenders and Realtors are not created equally. Not everyone gets to experience this knowing the facts, being given options on first time buyer programs or being led through the process. Many of my clients who weren’t first time buyers with me were slammed into the system of homeownership without a clue about the loan they were doing, consequences of certain programs, and some were even put into loans that they didn’t have to be in.
How would you like to get a grip on your first home-buying experience? The awesome team I surround myself with would love to help “get your education on,” with NO obligation. We’ll discuss the process from the first step of pre-approval to the last step of closing on your home and getting the keys! Oh, and did I mention it’s FREE*?
I have THREE seminars coming up in March. These are the same seminars, so feel free to pick the one that fits with your work or home location.
The South metro seminars are on Monday the 15th and Thursday the 18th from 6:30-8pm at the Cornerstone Mortgage office located at 436 Gateway Blvd. in Burnsville. I will be presenting these steps with trusted partners, Brandon Hedges — Homes of Minnesota Team, as well as Steve Howe – Minnesota Real Estate Team. We will help you take that first step to home ownership.
If the North metro is a better fit, then join us Thursday the 25th from 6:30-8pm at the Shoreview Community Center — 4580 Victoria St N #203. This time, I have the pleasure of presenting with Steve, as well as Tony D’Agostino, also with the Minnesota Real Estate Team.
Trust me — you will go away knowing so much more about the process AND will feel more comfortable now that you’re armed with information – info that many lenders just don’t share!! Both will be a fun and educational evening.
Please register by calling 952-808-0042 as space is limited. Hope to see you there!
*ALL of our team’s seminars are FREE of charge. Cornerstone Mortgage is proud to be a drop-off site for the CAP agency, which is a non-profit organization that collects food items and gently used clothing for Scott, Carver and Dakota Counties. If you can, please donate a canned food item, baby food or clean clothing so we can continue to support the families in need in the communites we serve!
Tags: down payment assistance, first house, first time buyer programs, first time home buyer, home buyer classes, home buyer seminars, loan process, loan qualifying, pre-approval
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Upcoming Events | 2 Comments »
February 27th, 2010 by Darcy
More changes are coming on the heels of all this market upheaval. Yesterday, Freddie Mac announced that starting sometime this September, they will stop purchasing and securitizing interest-only loans. For most people these days, this information isn’t really relevant. I seriously can’t remember the last time I did an interest-only loan. Interest-only loans were very popular three to four years ago. They allowed a buyer to qualify for a loan that they wouldn’t have otherwise qualified for. Certainly, there are other reasons for this type of loan, but this was one of the main reasons a person would do an interest-only mortgage.
Suppose before I go any further, I should explain what these are and why I think they, Freddie Mac, are choosing to do this. An interest-only loan is just that, interest-only. There is a period of the loan, usually 5, 7 or 10 years in which all you pay is interest on the mortgage. As I said earlier, this allowed people to qualify for a larger loan, hence, more of a house. Typically, these types of loans carry a slightly higher rate, approximately .125%-.25% , due to the higher risk involved. I will talk about risk in a minute. Let’s look at how this interest-only loan “piqued the interest” of many borrowers.
Suppose you’re looking to do a $350,000 loan (for most of you reading this, this probably isn’t your price range). Figuring a rate of 5% on a 30 year fixed rate, the principal and interest would be $1879. In most cases, you’d add your monthly taxes and homeowner’s insurance to this equation. Of this amount, for the first few years anyway, you’re making a dent in your principal of approximately $400/month. The rest of that payment, the interest, is the cost of your loan — about $1450. As you can see, saving $400/mo is a pretty sweet deal. Gosh, who wouldn’t do this type of loan? In this scenario, I’m not increasing the rate like I should just to make it more of an apple-to-apple example. If you live in the house 4 years, you’ve saved about $24,000. That’s huge.
What you’ve really done is avoided paying off $24,000 of your loan. Now what happens after the 5, 7 or 10 year period? This is where the risk comes in. Your loan would re-amortize for the remaining term using the amount you owe. So, five years later, you still owe $350,000. Now, your payment goes from $1450 to $2046, almost a $600/mo jump. I don’t know about you, but I wouldn’t be able to handle this increase. And hey, look where the market is today — people having to handle increases in payments due to these loans, as well as adjustable rate mortgages. Unemployment is up; home values are down … your whole premise for doing this loan was the fact that values were increasing. So, at the end of that time period, you could easily sell your home and still make out, or just refinance to a fixed rate. Not so much right now.
My opinion is all based on risk. Too many loans have gone bad. With the market not improving, it’s leaving people upside-down in their mortgages, no options but to let the house go or negotiate with the bank to sell on a short sale. Short sales aren’t any easier to deal with than foreclosures. Banks see the risk in these types of transactions too — if the seller is looking to do a short sale, then it’s just a foreclosure waiting to happen. It just may be best to “bite the bullet” now when they can get the home sold and avoid the costs to foreclose on a home. Quick definition for short sale: seller can only sell house for going market, which is less than what they owe on the home. They negotiate with their lender to accept an offer “short” of what is owed on the loan.
Okay, so I got off the subject a bit. In a nutshell, there is good reason for Freddie Mac to say “whoa” to doing interest-only loans. They are just a high risk in today’s market. My guess is lenders will stop doing these with Freddie Mac before it’s “official”. Here’s the bummer about this — first, there could be a high potential that Fannie Mae follows suit on this leaving interest-only loans non-saleable. But honestly, there are some situations and buyers that these loans work REALLY well for — someone who is transferred often for work. Thought process here is why invest principal into a home you’ll only be in a few years? Also great for those who are making income that isn’t really usable for qualifying, such as tips, commissions, bonus — income that requires a two-year history to use and the borrower doesn’t have that. If you know you have or will have that income, an increase in payment may not be an issue at all. Some people are very savvy about investments. Why not do this type of loan to “arbitrage” and use the savings to build up other investments. And last, there are a lot of retired people that this is a great way to have a lower payment since they’re on a fixed income. Eventually the home will transfer to other family members. No need to really care about whether they paid off their loan or not.
Needless to say, it’s a great way to avoid risk for Freddie, and who knows, they may bring it back in the future. I just don’t know if I agree that taking it away completely is the answer since it really has and can help many people. That’s my 2 cents on this upcoming change to the world of mortgages!
Posted in Posts, Tips & Tidbits | 2 Comments »
February 22nd, 2010 by Darcy
The last few years have been plagued with first time buyer programs. This is a very good thing. In 2008, the first time buyer tax credit was first introduced. It was quite a bit different than the tax credit now. “Back then” the program wouldn’t let the buyer take advantage of the federal tax credit AND a first time home buyer program, such as one with a lower rate or down payment assistance.
Then the second credit was introduced in 2009. Every year, it’s been getting better. In 2009, the two programs could be combined which gave buyers the best of both worlds. Money for purchasing and money to help after the fact. Thousands of people took advantage of this credit and quite a few of them “took advantage” of the credit — meaning, people cheated the system — there weren’t enough stop guards in the system. I even heard someone had their child apply for the credit. Hmmm, think you need to be 18 to buy a home. In any case, people scrambled to take advantage of the credit by closing on their home prior to December 1. First time buyers were coming out of the woodwork. It was a mad rush to buy, close and amend the 2008 taxes to get the money.
Psych! Guess you really didn’t have to buy and close by the end of November. Hail to the government; they extended the credit. Not only that, they made it current homeowner “friendly”. The new rule, as you probably know, is you must have a signed/accepted purchase agreement by April 30th and must close on the house by June 30th. The credit is equal to 10% of the sale price or $8000, whichever is less, for a first time buyer. The current homeowner can qualify as long as they have owned their primary residence for a consecutive five of the last eight years. Similar situation — 10% of the sale price or $6500, lesser of the two.
Here is what you NEED to know. We all like to get our refunds as quickly as possible! Who wouldn’t? So, e-filing is the way to go. And many people have done that. First, you can amend your 2009 taxes anytime after you close on the home. You’ll need to file a 1040x (form for amending) and the 5405 (form for the credit). The urgent piece of information is you CANNOT e-file. Here is information from the Minnesota Homeownership Center:
“Because of the documentation requirements for claiming the credit, taxpayers who claim the credit on their 2009 tax return must file a paper — not electronic — return and attach Form 5405, First-Time Homebuyer Credit and Repayment of the Credit”
So, thanks to people falsifying taxes and taking advantage of free money, you’ll have to do the lengthy step of filing by paper. And timing on these refunds? I have heard anywhere from 14-16 weeks. It doesn’t help that it’s tax time. Oh and thoughts about whether they’ll extend the tax credit. I really don’t think so. But, hey, I could be wrong. If they do extend it, you can count on a new blog!
Tags: 6500 tax credit, 8000 tax credit, down payment assistance, first time buyer programs, first time home buyer, purchase agreement
Posted in First Time Buyers, Posts, Tips & Tidbits | No Comments »
February 21st, 2010 by Darcy
How do you get started buying your first home — short of actually looking at houses or driving around on a Sunday and visiting open houses? There really is a “first” step in the home buying process. It’s to get pre-approved. Now, don’t mistake pre-qualify for pre-approval. These are two totally different thing! A pre-qualification is nothing more than gathering some info on your income, assets and debts to let you know the amount you can afford for a house payment and a sale price. This process does not hold any water and certainly doesn’t tell a seller you can get home financing.
Being pre-approved means a couple of things. First, you’ve applied for a loan – which can be done via the phone, in person or mycompany website which is the option many take. Our online application is a secure site which will only take you about 5-10 minutes, depending on how long it takes you to type!! A one-on-one meeting is not necessary at this time, BUT, I do suggest we meet PRIOR to you looking at homes. There is a lot to learn about the process, the money you need to purchase a home and the different loan programs and first time buyer programs you could qualify for. I would be doing you a huge disservice if we didn’t take the time to meet. Generally, my meetings take 1-2 hours. I try so hard to keep them manageable for you, but it’s my goal that you leave the appointment with a full understanding of what happens next. And, you feel like ALL of your questions have been answered.
The second piece to a pre-approval is pulling your credit report. The credit report is important for a few reasons. First, regardless of whether you are buying your first home or fifth, you must have at least a 620 credit score. Though it is true that loans insured by FHA (Federal Housing Administration) and VA (Veteran’s Administration) do not have minimum score requirements, it just doesn’t matter. FHA and VA are not buying or servicing the loan — the end investor is. THEY are the ones requiring the 620 score. And, there are some investors that require a 640 score. This part of the pre-approval puzzle has become crucial to qualifying for financing. It didn’t used to be this cut and dry.
The third part is submitting your loan to an automated underwriting system or to an underwriter. In order to confirm your pre-approval, it’s important that I collect documentation to support the information you provided on the loan application. The following documents will be required from you to complete this process:
-most recent paystub
-last 2 years W2s AND last 2 years federal taxes (it’s the last THREE if you’re applying for a first time buyer program)
-most recent MONTH bank statement, all pages, all accounts
-copy of your driver’s license (this is part of the Patriot Act that came about due to 9/11)
-any court papers, such as bankruptcy, divorce or child support
Because everyone has a different situation, there may be more documents requested. For instance, let’s say you had a $3000 deposit into your account from the sale of a car. Your “extra” paperwork would include a copy of the title, cashier’s check you got for the sale and a copy of the blue book value to substantiate the value matches what you sold the car for. Now you may be asking why this is any of our business, and truthfully, I would do the same thing too. All lenders want to source the funds you receive. If you have deposits other then income, then lenders want to know where the money came from — if it’s a loan, then we need verification of that and need to count payments in our debts. If it’s a gift, then we need to document that according to the specific program you’re doing. This can be a lot of back tracking which is why during our appointment, I will advise you what NOT to do while in the home-buying process. It’s better to know what you need to get to verify deposits then having to re-create documentation that may not even exist.
One of the main reasons this is the FIRST STEP in the process is two-fold — first, it insures that you can get financing and two, you will know what price range you can look at, as well as what payment you’re comfortable with. Sellers will require that you’re pre-approved. And just so you know, all pre-approval letters are NOT created equal. Just because a lender says you’re approved doesn’t mean this is true. Some lenders don’t take the step of verifying the information provided. Some don’t understand the rules of the first time buyer programs or don’t know the ins and outs of the loan type you’ve applied for. The paper the letter is written on is sometimes worth more than the actual “pre-approval”. More times than I can count, I was presented with a pre-approval letter from another company via the Realtors I work with. Low and behold, they were coming to me to “save” the deal because indeed, the person was NOT pre-approved. So, how can you tell? I guess the only suggestion I have is to work with a reputable company, one that’s known for your special needs (i.e. first time buyer programs). Listen to your agent’s advice. Even then, they aren’t always connected to the right people.
Woohoo — you’re pre-approved. Now what? It’s time to get excited because the fun begins — you get to look at houses and find one that fits your needs, as well as your budget. Speaking of budget. This is a VERY important thing to keep in mind. A lender can tell you your max payment is $1500, but in your heart and on paper, you know going over $1200 would put you in the poor house. Staying withing your comfort zone is key to having a great home -buying experience. I don’t plan to make your house payment so you would be wise to have a number in your head for that “max” payment you’re willing to exceed. When you do put some numbers down as a budget, don’t forget things like insurance, meals out, entertainment, clothing, etc. Many people forget these things — hey, even a coffee each day adds up! Another note … being pre-approved with take a lot of disappointment away from the process. If you start looking at houses you THINK you can afford and then come to find you don’t fall in that price range; you will be frustrated and bummed. Believe me; I’ve seen it. It’s better to know what your range is before you start looking — either on your own or with an agent.
So, take the first step to your home buying experience by getting pre-approved. It’s the one piece of this home buying puzzle that will help all the other pieces fall into place.
Tags: credit score, FHA, first house, first time buyer programs, first time home buyer, gift, loan process, pre-approval, VA
Posted in First Time Buyers, The Home Buying Process | 3 Comments »
February 16th, 2010 by Darcy
What is the Take Credit program? It’s a great opportunity to save money yearly on your taxes. And what a better time to think about taxes when we are so entrenched in them right now!!
Take Credit is a Mortgage Credit Certificate program, not a loan – it gives you a credit EACH year in the amount equal to 20% of the mortgage interest you claim yearly to use toward your tax LIABILITY. Okay, so that’s weird … who wants a tax liability? Wouldn’t it be better to get money back? Great questions! You actually WANT to owe money at the end of the year. To make this so, you would increase your W4 exemptions for federal withholdings. This way, you’ll get more money back in your paychecks, pay less in for taxes to the government and then, will have a liability that you can use this credit against.
First time buyers can take advantage of this program in the city boundaries of Minneapolis and St. Paul. You must be a first time buyer, which means you could not have owned a primary residence in the last three years. We prove this fact by getting the last three years of your tax returns. Here are some numbers to know for limits:
$83,900 – maximum household income for 1-2 people
$92,290 – maximum household income for 3+
$276,870 maximum sale price limit
There is no “special” rate for this program because again, it’s not a loan. You will use this with an investor that allows for the MCC. So I suppose you want a visual? I can do that, but first, one thing to know if you don’t … 100% of your interest on your mortgage as a homeowner is tax deductible. With this program, that is reduced by the 20% credit, so now you can only write off 80% of that interest. For example (finally, huh?):
$175,000 Loan Amount
5.5% Example Rate on a 30-Year Fixed
$994 Monthly Principal and Interest Payment
$9566 Total Interest Paid in Year One
$1913 — 20% of the Total Interest Paid, Mortgage Credit
That’s a pretty big number to be able to have as a liability. Think about it. If you were normally getting $2000 BACK, then you have $3900 to work on getting throughout the year by changing your W4s. How do you even start determining what that W4 change should be? You can certainly see your HR person or accountant. Or, you can visit a great IRS website to run some scenarios. Doesn’t it seem like you’re taking money from the government?? Let’s not go that far, but hey, I am sure they owe you something!!
A few things to note. The MCC program cannot be used with a Mortgage Revenue Bond program, i.e. first time buyer program that uses interest-free bonds to give you a lower-than-market rate. This program DOES have a recapture tax, which I will address in Tips & Tidbits post soon. You can do a FHA, VA or Conventional financing and the loan must be a fixed rate. With rates as low as they are on 30-year mortgages, it would be silly to do an Adjustable Rate Mortgage anyway. Something you may be wondering … is it a “use it or lose it” kind of program? Sort of. You can carry over any unused portion for up to three years. So let’s say in the example above you owe $1000 to the government. Due to your credit, you owe NOTHING, but you still have $913 to use for next year’s taxes, which means you need to get on adjusting your withholdings up ASAP. Let’s say your liability is actually $2000. Then, you still owe the IRS money, but in that example, it’s only a mere $87. Pretty sweet deal, huh?
One of the best parts?? If getting money toward your liability wasn’t enough, right? If you do FHA financing, which so many people are doing these days, we can use that 20% as assistance to help you QUALIFY for more! Yes, you heard me right. So, using that same example of your $1913 credit. If you divide that by 12 months, your credit PER MONTH for qualifying purposes is $159. In real dollars, that means if you kept the same house payment, you could INCREASE your purchase power by about $20,000, depending on property taxes and homeowner’s insurance.
So why don’t people do this program or why haven’t you heard of it? First, most lenders don’t do the MCC program and why, I don’t know. There is a cost to you of $575. You can see though, that one-time fee is WAY worth the financial benefits you will see yearly. So, if you need help qualifying for more house in the cities of St. Paul and Minneapolis … I can help and would love to!
Tags: City Living, conventional, credit, down payment assistance, FHA, first time home buyer, Minneapolis, rate, St. Paul, tax credit, VA
Posted in Assistance for Down Payment, First Time Buyers, Posts | 2 Comments »
February 15th, 2010 by Darcy
If you’re in the loan process right now, your head is probably spinning with all the new information. Throw in there a lot of references to insurance — insurance for the home (aka hazard insurance), for the mortgage company (aka PMI or MI) and title insurance. Oh, and to confuse the matter more, you can actually purchase mortgage insurance on your loan (in case something happens to you, the loan will be paid). What the heck is the deal with all these insurances and what is really protecting you?
I am so glad you asked. Let’s just start with some explanatory definitions, then I will get to the meat of this. Homeowner’s Insurance is insurance that covers your home and the contents in case of a catastrophe or burglary. As lenders, your house is our collateral. If something should happen to it, we want to make sure you have enough coverage to replace your home. This is a policy you purchase with your current insurance agent or one I could refer you to.
If you were to buy a townhome or condo, you may not need this type of insurance. In most instances the homeowner’s association covers that with the owner’s association dues. There are some changes that have occurred with investors in regards to requiring a separate policy. If the association’s insurance policy only covers “studs out”, then you would need to buy a special policy called a HO-6 — basically, this will cover the “studs in”, which means, all your personal belongings along with cupboards, fixtures and appliances. If the association does have the extra coverage, it is still advisable for you to get the HO-6 policy (just won’t be as expensive) to cover your personal belongings. In this instance, proof of this would NOT be required at closing.
How about the “dreaded” Private Mortgage Insurance (PMI) on conventional loans or Up-Front Mortgage Insurance (UFMIP) with FHA? First of all, it’s not something to dread; it’s reality. And in this day and time with all the private mortgage insurance companies that had to pay on claims due to foreclosure, it will never go away. In a positive light, it allows you to do a minimum down program. Anyway, the purpose for mortgage insurance is to insure the lender in case of default. You remember AIG??? Who couldn’t forget the insurance company that was bailed out … a few times, right? They insured a lot of the high risk loans that were done in the past years. No wonder it’s harder to get this type of insurance. Only in the last few months have the PMI companies “let loose” a little to do 3% loans. UFMIP is for FHA loans. FHA is self-insured. They have an up-front amount that is financed into your loan amount, as well as a monthly amount for insurance — which is lower than conventional insurance.
Last, at least the last I intend to address, is Title Insurance. This is the CHEAPEST insurance you will ever purchase. There are two types of title insurance — lender’s and owner’s. The lender’s policy is required to be purchased to insure the lender that they are in first lien position. One of the title company’s jobs is to search public records at the county to check for any liens. The title company can only find what is correctly recorded. You have the option to purchase a policy for yourself, called an owner’s policy. This protects YOU in the event any liens were to appear against the property that you didn’t incur. For instance, let’s say that a few owners ago, a new roof was put on the home and the owners didn’t pay the contractor. In order for the contractor to make sure he gets paid, he placed a lien against the home YOU’RE purchasing. If recorded correctly, the title company will find this and require the seller to pay it off to give you free and clear title. If, however, someone made a mistake at the county, then it may not show up. Bummer deal is liens follow the address, NOT the person who incurred them. Five years later you decide to sell and wah-la, a $5000 lien appears. Hmmm — what to do? You have a few options — pay it (cheerfully I’m sure :-D ), go to court to fight it or … drum roll please … at closing when you purchased your home, you purchased owner’s title insurance. With this insurance, you pay ONCE, at closing, and it covers you for the ENTIRE time you own your home. This insurance depends on the loan amount and sale price, but for first time buyers, it won’t be much more than $200 or so. Paying just $200 to save $4000. No brainer. The two real estate attorneys I trust would NEVER let their clients close without it. They spend way too much time fighting in court for other clients that don’t have the insurance. Unpaid work is just an example of a type of lien, but there are more “opportunities” to have to use it — heirs to a property, divorce situation, many things that may put a person in title to the home YOU own.
The long and short — there are many types of insurance during this process. The only one you have the CHOICE to purchase is the owner’s title insurance. It’s a necessary, but cheap, evil and well worth the investment. Just do it!
Tags: conventional, FHA, homeowner's insurance, loan process, PMI, private mortgage insurance, title insurance
Posted in Posts, The Home Buying Process, Tips & Tidbits | 1 Comment »
February 12th, 2010 by Darcy
| February 18, 2010 |
| 5:30 pm | to | 6:15 pm |
When I titled this, I could hear Tina Turner singing in my head. Maybe I could add her soundtrack playing in the background of her big hit … or not! Let’s get to the topic at hand here — credit.
“Check your credit once a year” is what you’re told all the time. Open credit cards so you can develop a score. Close those unwanted accounts. Certainly, some of this is good advice, but not all of it will help. More and more in this current market, credit scores have become crucial in determining whether you can get credit or not. In the last year, scores have become the FIRST thing companies look at when choosing to extend credit. It didn’t used to be this way!
But what makes up a credit score? How do you “get one” if you don’t have it? What types of things DON’T affect your credit score? These are all questions and topics that will be discussed at the next Credit Seminar, Thursday, February 18th from 5:30-6:15 pm. It’s located at the Cornerstone office — 436 Gateway Boulevard, Burnsville, MN. To RSVP for this event, please contact Cheryl at 952-808-0042. Bring your questions!
If you want more information about buying your first home, feel free to stay for our First Time Home Buyer Seminar from 6:30-8pm. Long night, but may be worth your while to learn about the important things surrounding the home-buying process.
Tags: credit, credit score, first time home buyer, seminar
Posted in The Home Buying Process, Upcoming Events | No Comments »
February 11th, 2010 by Darcy
Let’s get on our horse and ride out of here before all you-know-what breaks loose with the coming FHA changes. Okay, that’s a little dramatic … more like a lot dramatic. Let’s get a grip on reality. First of all, if you don’t know it, FHA is known for minimum down payment loans. Right now, and with no change in sight, their down payment requirement is 3.5%. Being that FHA is federally backed, they have lots of rules and stipulations to follow.
How about we get the “bad” news out of the way first. Please note the quotes. Any FHA loan requires something called Up Front Mortgage Insurance Premiums (UFMIP). FHA is self-insured which means they don’t use private mortgage insurance companies (PMI) to cover a portion of their risk if the loan defaults. This UFMIP is financed into the loan size which is currently equal to 1.75% of the loan amount. The change?? Starting April 5th, they will be increasing that to 2.25%. Why the increase? FHA has had to take a lot of losses due to the high foreclosure rates. They are supposed to keep 2% in their funds for this insurance — they are down to 1/2% — ouch. Hence the increase. So what does this mean to you? Not a lot. It’s about a $5/mo difference in your payment, depending on your loan amount. Calculate that out. $5/mo over year is $60/year and let’s say you live there 5 years — so $300. Doesn’t that seem so piddly? Imagine though that most loans that have been originated in the past 2 years have been FHA. That adds up fast!
This next change is so lame because it will neither help or hurt anyone. Why they have it is beyond me. Currently, FHA doesn’t have a minimum required credit score. The new rule requires buyers with a 580 score or less to put 10% down. OMG, 10% down. Bet you’re questioning what I said regarding a 3.5% down payment from my earlier comment. Reality — it’s a mute point. No investor buying an FHA loan will take a buyer with a score under 620 and some investors are moving toward 640. So, can you say lame with me???
Here’s the doozie that WILL affect you — we just don’t know when. They are predicting Spring/Summer. As of right now, FHA allows the seller to pay up to 6% of the sale price toward your closing costs and pre-paid expenses. Hitting us like a brick in the head, they will be reducing this to 3%! This is huge. Typically, asking the seller to pay 4-4.5% of the sale price gets you what you need. Though the lower the sale price, the higher the seller paids percentage needs to be due to the fixed closing costs that aren’t tied to the loan size. In real terms, instead of just needing 3.5% down payment, you will need to up your investment to about 4.5-5%. Yup, this is really going to hurt in the pocketbooks and savings of the buyers. It’s putting FHA on par with conventional financing which has always limited seller paid costs to 3% (with less than 10% down). FHA does allow gifts for down payment and closing costs.
And, not all changes are bad! Here is the good news — phew! Of course only 25% of the changes are positive. Well, that is a bummer. We just have to deal. For instance, this change has been effective since Feb. 1. FHA has temporarily suspended the anti-flipping rule. The term “flipping” has quite a bad rap. It’s really due to people buying a house at less than market value and turning it to sell for more when the buyer did NOTHING to it to warrant the additional increase in price. This term gets tossed around like a salad — “I want to buy foreclosed homes and ‘flip’ them” — Whether it’s from friends, the media or even those programs on TLC, almost everyone gets the concept. The rule, which is suspended for ONE year, said that a purchase agreement on a home HAD to be 90 days away from the date the title transferred to the seller. Whoopie, right? Why is this even important to you? It’s opened the door to many more homes that you, as an FHA buyer, can actually put in the running.
That’s about it in a lengthy nutshell! To recap, the two major changes you need to be excited/concerned about is the removal of the anti-flipping rule which is in effect now and the change in seller paid costs with an effective date in Spring. Just stay tuned for more updates as they come. And let’s get off our horses and actually enjoy what has changed for the better and sweat about the projected changes when they come.
Tags: closing costs, conventional, FHA, finance closing costs, flipping, PMI, private mortgage insurance, seller paid closing costs, title
Posted in First Time Buyers, Posts, The Home Buying Process | No Comments »
February 10th, 2010 by Darcy
Nothing like starting a post with a negative — things NOT to do. It would be better to say what you should do, but as a loan officer that sees so many things that need fixing, I would rather warn vs. fix. If you’re a first time home buyer, please take the time to look this list over. Admittedly, because of it, I sometimes get questions that aren’t really an issue for the pre-approval process. I totally appreciate that my clients are reading the “instructions” and are checking with me ahead of time. I would rather be safe than sorry.
Let’s start with the biggest offender — deposits into your bank accounts. While in the process, please don’t make any deposits other than your regular payroll deposits. And, please resist the urge to transfer money back and forth between accounts. So go ahead, ask the question … why is it any of our business what you do in your accounts, right? I respect that question, but of course, have a valid response. The thing is, FHA, VA and Conventional guidelines all require that we “source” the funds for down payment. If there are deposits, we need to verify you didn’t take a loan out (and if so, we need to know the terms of the loan to consider the payment as a debt) or make sure it wasn’t a gift. The loan type you’re doing needs to allow for gifts and we would need to document the gift and donor.
What else are we going to restrict you from? Another biggie — please don’t mess with your credit. For example, don’t start closing unused accounts. History makes up about 15% of your credit score and if they go away, you will reduce your history. This is super important for first time buyers since they might not have a long history to begin with. A few other things — obviously, don’t open any new accounts, pay off any collections (unless your lender told you to do this) or pay off debts. New accounts mean you’ve had inquiries into your credit. These can negatively affect your score. I advise clients NOT to pay collections. Main reason is tracking, and for the most part, only VA guidelines require collections to be paid. I would rather you pay it off at closing. This way we have a paper trail of payment vs. assuming you’ll get a receipt from the collection agency. Good luck with that! Oh, and the reason I keep mentioning scores is that they are crucial to whether you can get financing or not. These days, you must have a 620 score or higher to get a loan. I have a perfect example of a current client who had a score of 622. We were golden; but her price range limited what was available to look at. Finally, five months later, she’s ready to go and I had to pull new credit (reports are good for 120 days). Due to her increasing her debt-load with balances over 50% of the available credit limit, her score dropped to 618. UGH! There is seriously nothing we can do but wait. On her end, she can use some of the down payment money she was saving to pay down these cards to less than that 50% mark. Since she had no lates or other derogatory things, this is the only reason her scores decreased. The moral of the story … don’t mess with credit, which can even mean, don’t increase your balances on revolving lines such as credit cards.
As much as a new job is really cool, make sure you’ve consulted with your lender prior to this change. We just ask that you don’t change your pay structure or how you’re compensated. Let’s say you’re currently salaried and you have a great opportunity to earn more by changing how you’re paid (which is usually more a benefit to the employer in the beginning). So now, you make a base salary, lower than what you were previously making, but have a whole lot more potential top make more by receiving commissions. This may be true, but you may have just unknowingly sabotaged your ability to get a loan. Why? Well, all loan types require you have a 2-year history of commissions; otherwise, we can’t use the income for qualifying. This is true with bonus, self-employment, tips and overtime — all need a 2-year history. So don’t go from being employed to starting your own business either. This will hinder your financing plans big time.
The next one seems super obvious … well, I think so. Don’t make any large purchases such as a new car, furniture or appliances. This covers a few of the areas above. For instance, if you’re offered a no-payment option for 2 years on appliances, you may say “sweet” and go for it. Couple things happen here — your credit is checked, so an inquiry is made which may bring your score down. Also, even though you don’t have payments, we still have to count a payment on this new debt. This could make it so you can’t buy the home you have a purchase agreement on. That would not be good, for all parties involved, you especially!
Last is my rule … don’t ever feel like you can’t ask a question. There is never a right or perfect question, as well as a dumb question. I have an “open question” policy. My hope is I can assist you with your loan, and during the loan process, make sure I’m answering your questions before you even have them.
There you have it; a few things that you shouldn’t do while in the loan process. Believe me, following these “rules” will make the process so much smoother. It’s easier to paper trail prior to an event happening vs. having to chase papers since it’s already done. Just say “no” to the above so we can say yes to your loan approval.
Tags: credit, gift, inquires, loan qualifying, pre-approval
Posted in First Time Buyers, Posts, The Home Buying Process, Tips & Tidbits | 4 Comments »
February 9th, 2010 by Darcy
So, what is it? How much will it cost me? When do I pay it? Is this money in addition to all the costs on my good faith? All very good questions that I plan to answer. If you’ve owned a home in the past, this term isn’t new to you, though the information may still be important. As a first time buyer, this information is VERY important to know. Let’s start by saying “earnest money” should have been something that was explained to you by your Realtor or lender in the first meeting. If not, then it’s time to move on. Here’s why. Earnest money is money you will need prior to closing on a house. It’s real money you need to have saved or gifted. It’s not just play money that goes with a purchase agreement.
Here’s the answer to those questions above. It’s a check you write that is presented with your offer to show the seller you’re “earnest” in buying their home. The amount can vary from $500 and up, the most common amount being $1000 or $1500. You DO need to have this money in your account. Once your purchase agreement is accepted and all contingencies have been cleared – i.e. inspection on the home passes and you plan to move forward — the check is cashed. Here is the crucial thing. If you’re doing a first time buyer program that requires you to have some of your own funds into the transaction, this money CAN be applied as such. This means that the money does need to be yours, not a gift and not a deposit from somewhere else that can’t be traced. The earnest money IS part of your down payment. It will come off the bottom line at closing for the funds you need assuming we, the lender, can prove it cleared your bank account.
Can you get it back if you bail? Ha, good question. If you choose not to buy due to an unacceptable inspection, then yes, you can. If you cannot secure financing, more often than not, this would also qualify to get it back. If you don’t perform in a timely manner on the purchase agreement, back out or otherwise, I wouldn’t count on getting it back. Plus, the seller could sue for damages — like time off the market. Working with a knowledgeable Realtor will help you understand the ins and outs of getting it back if necessary.
There you have it — earnest money. When going out to look at homes, don’t leave home without it — your checkbook, that is! You never know when you will come upon the house you want to make an offer on.
Tags: earnest money, first house, gift, purchase agreement
Posted in First Time Buyers, Posts, The Home Buying Process, Tips & Tidbits | 1 Comment »
February 9th, 2010 by Darcy
Most of us would like to think so. I’ve watched that show a few times and have thought “I don’t remember learning that”. Of course, that was over 30 years ago. Wow am I old! What I do remember as a 5th grader is breaking my leg and being the first person to ride in our new elevator. Oh yeah, that was the coolest. I had a special key and everything — such privilege! Now, breaking the leg on a school event and being taken to the hospital in a bus… not so much! I was heckled quite a bit during that time. Hey, maybe that’s why I don’t remember learning certain things … I was too traumatized by the mean kids. Ha!
So seriously, why start a post with this? As a home buyer, especially those of you looking to buy for your first time, you “learn” a lot about the process, like what lender to use, what to ask when comparing loans and other wonderful tips, mostly from friends, family and co-workers. I am here to tell you that though they may seem to know the ropes, it doesn’t mean their situation matches yours. There are plenty of things you can teach them.
For instance, you may be advised to ask what rates are when narrowing down what lender you want to use. Knowing the rates is a very smart thing to do. But, realizing why this question isn’t valid is smarter. On any given day, rates can change. One lender can be higher or lower than another and change positions within the same day. There are many loan officers out there that will quote you an interest rate that “teases” you into wanting to work with them. Truth of the matter is rates don’t matter one iota unless you have a purchase agreement accepted on a home and you can lock that minute. Until that time, lenders can tell you whatever they want. Notice I am being general here. I am of the mindset that starting honest is a good thing — not only that, there is always a little fear I have, that indeed, you will call back (good thing) and I have to abide by my rate commitment (not so good if I under-quoted). And so you know, many first time buyer programs have their own rates tied to them. So regardless of what lender you use, the rate is the rate. No variance. This means even though you’re doing an FHA loan, you won’t be quoted an FHA rate, but that of the first time buyer loan program. And, this also assumes the lender you called can and is willing to do these loans. Many don’t and will give you bad information to steer you from something that may be the BEST deal for you overall.
Okay, if the rate is the same because you’re going with the first time program, then what else should you compare? You may be advised to compare closing costs by getting a good faith estimate. Again, smart idea to check costs between lenders, but this isn’t the end all for making a decision. Here’s a question … what is it worth to you to get your loan closed on time or at all for that matter? Tough to answer since you might not be at that point yet. I will say that it’s worth it’s weight in gold. Trust me on this. In the 16 years I have originated, I have had many people jump ship after I’ve spent hours educating and being there to answer their questions, just to save 1/8% in rate or $500 in closing costs. And you know what? I can honestly say that a good number of them call back complaining about one thing or another with the other lender stating they “wish they had stayed with me”. Nice compliment, but they don’t pay the bills. Compare your costs; go ahead. Just remember it’s tough to put a dollar figure on reaching your dream of home ownership.
What else are you hearing? Had anyone suggested working with a broker because they can “shop” to find you the best rate? Or maybe they’re suggesting you go with a bank, a lender that does everything in-house. All good advice. Keep in mind; you are getting this advice due to that person’s experience with THEIR process. Gosh, I can’t tell you how many people say to me during a meeting “my friend got this rate” or “my friend only needed to put xxx% down”. Yes, their friend probably had that experience. Back to it being THEIR process. On conventional financing, for example, depending on the amount down and your credit score, you could pay a higher rate than someone whose score is higher. It’s reality. Or maybe they “financed” their closing costs so you should too. Want the education here so you are smarter than the 5th grader — ie your friend, family or co-worker? Closing costs cannot be financed in the way you may think. The only way to “finance” costs is to have the seller pay them. So why would that make them financed if the seller pays them? As a good student, that is a brilliant question. Let’s say the house you want is $100,000. When you make your offer, you ask the seller to pay $3000 toward your costs; the seller agrees. What did they just agree to? Making $100.000 on their home or making $97,000? You got it, the lesser figure. Essentially, then, you could have paid $97,000 for the home, asking for nothing, and they would have agreed. Indeed, you are “financing” the costs in this respect.
Okay, off subject on the last one. It doesn’t necessarily matter what type of lender you choose. You want someone reputable, honest, knowledgeable about the first time buyer programs, as well as forthcoming with information on them; and most importantly, you want your deal to go smoothly. All lenders have their down sides. A bank just offers one product. A broker gives you options. Sometimes, this really means the broker has more opportunities to make more money on your loan (which you won’t know and really don’t care if you’re getting what you want for terms and customer service). Could you get all these things under one roof? Of course you can!! We, among a few other lenders, offer both– the security of having in-house processing and underwriting, so control of the process, along with options. And when searching your options, don’t forget to ask about the first time programs. If you really want to test their knowledge, let them know you’re a first time buyer and see if they offer programs that would suit your situation. If not, then I submit to you to take a pass on that lender. They won’t be working in your best interest.
I know there’s more to being smarter than a 5th grader and plenty more scenarios I can throw at you. Bottom line … make sure your questions are handled, options are proposed and the company has enough support to handle your loan through the process. Oh, and tell your friends, family and co-workers “thank you” for their advice and let them know you’ve got your situation handled. There are other ways to put this, but if you still want to keep them as friends … you may want to tread lightly! Oh, and one last thought. By no means am I saying to stop listening. Some advice will be good; it’s just choosing what advice to listen to. Good luck!
Tags: closing costs, finance closing costs, first time home buyer, good faith estimate, rate, seller paid closing costs
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process | 1 Comment »
February 6th, 2010 by Darcy
Lucky you! There are many buyers these days getting financial help from family. I want to give you a few tips on getting gifts for your home buying process. Not all programs allow gifts or have the same “rules” on the process. In this tips & tidbits, I will address gifts for FHA loan types since these make up over 75% of my current business.
- gifts can only come from family members
- gifts CAN cover all of your down payment and closing costs, unless the program requires a minimum investment, like the Dakota County Bond Program
- don’t deposit gift money into your accounts until you’ve discussed this with your loan officer
- the funds for the gifts WILL be tracked — not only into your account, but proof will be requested from your family to prove they had the money to give you (there are specific guidelines to follow)
- cash is not an acceptable gift
- if demonstrated, gifts could come from a non-family member, i.e. fiance or partner (certain documentation will be required)
- unsecured, borrowed funds are not acceptable sources of gifts
These are a few things that come to mind when advising on gifts. Maybe you’re asking why even address this? Here’s the thing, in the 16 years I’ve done this, I’ve seen way too many times when a loan file gets hampered by doing the wrong thing with gift money. It’s my goal to give you the best advice possible so this doesn’t happen to you. It’s already a stressful situation buying your first home, it certainly doesn’t need to be worsened by having to create a paper-trail for something that already happened. Better to know what is expected of you on the FRONT end of your home-buying process then coming to you and your family at the end asking for more paperwork. Oh how fun!
Moral of this tip — please be upfront with your intentions to get a gift and hopefully you will be given the right advice the first time!
Tags: closing costs, earnest money, gift
Posted in Assistance for Down Payment, First Time Buyers, Tips & Tidbits | 2 Comments »
February 5th, 2010 by Darcy
If it wasn’t great enough that we just got a new issuance of money in the Dakota County area; we now have NEW first time buyer money in the Minnapolis and St. Paul area under the City Living Program. This money is just available in the geographical limits of the Minneapolis and St. Paul area, so no other areas of Hennepin County or Ramsey. Having this program available is such good news.
How do you qualify for this? First, you must be a first time buyer, someone who has not owned a primary residence in the last THREE years. There are income limits you must fall under and HOUSEHOLD income is calculated off all members in the household over age 18. Here are the limits:
83,900 1-2 person household
92,290 3+ person household
There is also a purchase price limit of $376,870. You cannot go over $1 above this! I don’t think you’ll have any problem since this limit is quite sufficient to handle any properties that are perfect for first time home owners. The sale price/purchase price limit is $376,870. Another thing to know is NO personal property can be included in your purchase agreement. That means anything that isn’t attached to the home — applicances are the most commom. Don’t panic though — you will still be able to get these things agreed upon. You definitely want to make sure you’re working with a knowledgable agent in this area. I have a few partners that I can highly recommend!
Want the REALLY, REALLY good news? Rates … and it’s all about rates isn’t it? It shouldn’t be; but again, that’s another post. Please note that you still must qualify for a regular loan. Here’s the way I like to explain this. As a buyer, you need to qualify or meet the guidelines for an FHA, VA or conventional loan. Let’s call this the “Cake” you’re dying to eat! Once you’ve got this qualification, then we can see if you meet the guidelines for the City Living program, which we’ll call the “Icing”. If you’re like me — cake is ONLY good with icing! So, again, you have to qualify for the cake and then have to meet the qualifications to get the icing drizzled all over it. Nummy. The “Sweet” taste of this is a rate of 4.75% on a 30-year OR a rate of 4.99% WITH 2% of the loan amount to be used toward down payment or closing costs. Another important point, you DO need $750 of your own money into the transaction, which cannot be a gift.
They will FORGIVE this second loan if you occupy the home for 7 years. If you sell under this time, the full amount you got for the second loan is due. Fortunately, this loan is 0% interest and NO payments are ever due during your loan. It’s like getting a “loan” from Mom and Dad — “just pay us back when you’re done with it”. So, you sell, you pay back.
Since this is a first come first serve program, you definitely want to make sure that you’re not only pre-approved with a lender that knows these programs, but also knows how to explain the important nuances of them. I can help you navigate the waters and make sure you’re sailing strong during your trip as a first time home owner!!!!!!!
Tags: City Living, closing costs, down payment assistance, FHA, first time home buyer, Hennepin, Minneapolis, pre-approval, purchase agreement, rate, St. Paul, VA
Posted in Assistance for Down Payment, First Time Buyers, Posts | 5 Comments »
February 3rd, 2010 by Darcy
Okay, so this isn’t new news. This is the third go-round with the first time buyer tax credit. The subsequent tax credits have been ”bigger and better” with new additions, making the most recent credit the “best”. Remember last year — the tax credit that would expire at the end of November? Wow were people hustling to get their home loans closed by that date. There was a call to action, an actual deadline. Buy your first home now or lose money! Let’s get real — you can’t lose money you don’t have, so that wasn’t a great way to get people off the fence and buy. It was funny how first time buyers were coming out of the woodwork last fall to “cash-in”. Many of those buyers are still waiting for their “check in the mail”. It will come and that’s the good news.
But here’s the better news. The government is willing, yet again, to pay you to buy your first home. Oh, and if you’re not a first time buyer, no problem. You get to reap the benefits too if you meet a few qualifications – you must have lived in your home for at least 5 consecutive years out of the last 8 years. For the non-first time home buyer, you can get up to a $6500 tax credit! For the first time buyer, you could pocket up to 10% of the sale price with a maximum amount of $8000. Seriously, I wish I was in the market to buy a home. There are income restrictions, which most people will fall under, so it’s a mute point. There has been some talk out there that you can use this tax credit as down payment for your home. Hmmmm, wouldn’t that be nice … getting money for buying a home prior to actually buying it. Essentially, this was ixnayed by most, if not all, non-profits because it was too risky to be fronting that kind of money. Makes sense to me.
The current tax credit is the last tax credit, so they say. When it’s done, it’s done. No more Mr. Nice Government. So what do you have to do to qualify? Buy a house. Yep, for the most part, it’s that simple. Get an offer accepted on your first home, or subsequent home, by April 30th, 2010 and close by June 30th. My guess is you would have already filed your taxes by the time you close. Well, I hope so since taxes are due April 15th. No worries. You can complete a few forms, the 1040x amendment to your personal taxes and the 5405 which is the specific form for the home buyer tax credit. This way, you won’t have to wait to file your 2011 tax returns. Oh, the stuff you can buy to fix up your first home! Not that you have to use it this way, but the government’s philosophy behind all this is that you will go out and “stimulate” the economy by buying goods and services. It would sure help me if you did, but there is nothing wrong with using that money to pay off some debt or set aside savings — all are good uses of FREE money!!
But wait; there’s more — can you hear the infomercial music? If you are a first time buyer, you can use a down payment assistance program and STILL get this credit. There is plenty of money out there just waiting for you to use. Best part about this money … it’s totally forgiven if you live in your home for three years as your primary residence. That’s another blog on it’s own.
So, assuming the government keeps their word and doesn’t extend this tax credit, you do need to act NOW. I mean, come on, houses at all time lows, rates at all time historic lows and money to help you fund your down payment. Wowsers, can you say “incentive”? I think I have beaten this topic a bit too much. My advice is to ONLY buy if the time is right for you. Sure, the call to action couldn’t be stronger. But, if you’re not financial willing or able or have commitment issues, then wait. There is no reason buying your first home or buying another home if your conscience is saying “don’t”. I would hate that the pressure to “act now” pressures you to buy.
Feel free to give me a call or email if you want more information on this. And please, only “act” on this if you won’t regret it later.
Tags: 6500 tax credit, 8000 tax credit, closing costs, federal stimulus, first house, first time home buyer, rate, tax credit
Posted in First Time Buyers, Posts | 1 Comment »
February 3rd, 2010 by Darcy
| February 18, 2010 |
| 6:30 pm | to | 8:00 pm |
| February 25, 2010 |
| 6:30 pm | to | 8:00 pm |
Did you know the government extended the first time buyer tax credit? How about the fact that not all lenders offer down payment assistance programs or first time buyer programs? It’s pretty amazing to know you’re essentially getting paid to buy a home. Crazy, isn’t it? There are many people out there, maybe you included, that have a desire to own a home, but sit on the sidelines due to uncertainty, lack of knowledge of the process or being gun-shy due to stories about another person’s bad home buying experience. It doesn’t have to be this way! Buying your first home should be educational, pain-free and believe it or not, FUN! It’s sad how many people go through this experience without knowing the facts, being given options on first time buyer programs or being led through the process, not slammed into the system of homeownership.
How would you like to get a grip on your first home-buying experience? We’d love to help you navigate through this process — educate you, with NO obligation, on the steps you will take to become a homeowner — from the first step of pre-approval to the last step of closing on your home and getting the keys! Oh, and did I mention it’s FREE*?
We have TWO seminars coming up in February. These are the same seminars, so feel free to pick the one that fits with your work or home location.
The South metro seminar is on Thursday the 18th from 6:30-8pm at the Cornerstone Mortgage office located at 436 Gateway Blvd. in Burnsville. I will be presenting these steps with Realtor, Steve Howe, of the Minnesota Real Estate Team. The two of us will help you take that first step to home ownership.
If the North metro is a better fit, then join us Thursday the 25th from 6:30-8pm at the Shoreview Community Center — 4580 Victoria St N #203. Again, Steve and I will be presenting. This time we’ll be joined by Realtor, Tony D’Agostino, also with the Minnesota Real Estate Team. Trust me — you will go away knowing so much more about the process AND will feel more comfortable now that you’re armed with information – info that many lenders just don’t share!! Both will be a fun and educational evening.
Please register by calling 952-808-0042 as space is limited. Hope to see you there!
*ALL of our team’s seminars are FREE of charge. Cornerstone Mortgage is proud to be a drop-off site for the CAP agency, which is a non-profit organization that collects food items and gently used clothing for Scott, Carver and Dakota Counties. If you can, please donate a canned food item, baby food or clean clothing so we can continue to support the families in need!
Tags: federal stimulus, first time home buyer, home buyer classes, home buyer seminars, tax credit
Posted in Assistance for Down Payment, First Time Buyers, Posts, The Home Buying Process, Upcoming Events | 2 Comments »
February 1st, 2010 by Darcy
Can you say FINALLY??? We have been waiting patiently, or maybe for some, impatiently, for more money to come available. It’s here. And a week later, you will see money come out in the cities of St. Paul and Minneapolis for the City Living program – very similar to this.
The skinny on this first time buyer program? Well, you need to be one, which means you could not have owned a home in the last 3 years. Because this is a bond program, you will be offered a lower than market rate and good news … it doesn’t change with market volatility. The rate is 4.99% AND depending on your household income, you could qualify for up to $10000 in down payment assistance. The first time buyer assistance isn’t forgivable, meaning you need to pay the zero interest, down payment money back when you sell. If you get $7000, then you pay back $7000. It’s pretty cool — here’s money to help and just give it back when you’re done using it. Oh is this awesome!
There are sale price and income limits for this program, as with all bond programs.
$83,900 1-2 person household
$92,290 3+ household
Maximum Sale price is $276,683
This isn’t like the other first time program they had called Silver Lining. It’s not as restrictive. No crazy strings like the house needs to appraise at 1% higher than the purchase price and there is no requirement for a special home inspection. One thing that IS required is you have to attend the Homestretch class where you can sign up at http://www.hocmn.org . If you’ve taken this course, it’s acceptable to use your current certificate of completion pending it’s not over a year old from the date of closing on a house.
So, now you have the AFTER closing tax credit up to $8000 and you can get up to $10000 BEFORE your purchase to use toward down payment and closing costs. By all means, please call if you have any questions or want to take advantage of this program. It’s first come first serve, so get out there and buy some of those great deals in Dakota County. Oh and one important point, you DO need $750 of your own money into the transaction. This cannot be a gift.
By the way, not all lenders have access to this program. Make sure you’re working with an expert in first time buyer programs. It’s important you’re educated on how the program works, what the recapture tax is and other parameters for the program.
Tags: City Living, Dakota County, down payment assistance, first house, first time buyer programs, first time home buyer, Minneapolis, pre-approval, purchase agreement, rate, St. Paul, VA
Posted in Assistance for Down Payment, First Time Buyers, Posts | 3 Comments »
