There has been so many changes in the mortgage industry nationally and in Colorado over the last few months it's tough to keep track. Our business has been constantly changing for the last 3 years, but over the last few months we have seen big changes that will affect you trying to obtain a loan. Below I have listed the big changes and how they will affect you.
Qualifying debt-income ratio has been lowered by most companies to 45% from 50%. The tougher guidelines decrease your purchase ability. If you household income is $4,000/month your purchase power has been decreased by over $30,000.
When FHA increases their fees this spring (upfront and monthly mortgage insurance) you will not only be paying more you will also be buying less.
CHAC in Colorado has recently changed their guidelines AGAIN, but this time it's to the home buyer's benefit. CHAC will once again provide down payment assistance to most home owners in Colorado. They do not lend in all cities and counties so for more information please contact us.
The new GFE which was instituted at the beginning of this year, doesn't do much but create a new headache and more paperwork. If you not seen this form you will get a good laugh once you receive it.
It's important that you understand how much the process and guidelines have changed before you begin the process of refinancing or purchasing a new home. Please call with any questions or advice. Or you can visit our website www.colomortgages.com
Friday, February 26, 2010
Wednesday, February 17, 2010
There is Not Much Time Left
No I'm not talking about the tax credit. While the home buyer tax credit has received the most attention, the government's mortgage backed security (MBS) program has done more for the real estate market and may have a bigger impact when it's over.
The federal government allocated $1.25 TRILLION to purchase MBS to keep mortgage backed rates. In fact, they have become the ONLY player in the MBS market. The MBS purchase program is set to expire at the end of March. Once the government leaves we will see rates increase, the question is how much? Some experts believe we will see an increase of at least 1% immediately and possibly 2%-3% higher by the end of the year.
What does this mean in dollars? If you have a $200,000 loan currently you could receive an interest rate of 5% which would give you a payment of $1,073. If rates increase to 6% your payment will increase to $1,199. The difference of $125/month or $1,500/month or $45,000 over the life of the loan.
If you thought of refinancing, have a rate above 6%, have an adjustable rate, or purchasing a new home, do it now. Go to www.colomortgages.com and apply online for free.
The federal government allocated $1.25 TRILLION to purchase MBS to keep mortgage backed rates. In fact, they have become the ONLY player in the MBS market. The MBS purchase program is set to expire at the end of March. Once the government leaves we will see rates increase, the question is how much? Some experts believe we will see an increase of at least 1% immediately and possibly 2%-3% higher by the end of the year.
What does this mean in dollars? If you have a $200,000 loan currently you could receive an interest rate of 5% which would give you a payment of $1,073. If rates increase to 6% your payment will increase to $1,199. The difference of $125/month or $1,500/month or $45,000 over the life of the loan.
If you thought of refinancing, have a rate above 6%, have an adjustable rate, or purchasing a new home, do it now. Go to www.colomortgages.com and apply online for free.
Wednesday, December 23, 2009
HAMP and Another Short Sale Disaster
New numbers were published by the government a few weeks back with regard to HAMP, the government's loan modification program. And I was surprised they would release the numbers! Any one who has tried to obtain a loan modification, this might not be too big of a surprise, until you find out how much the government has paid out.
Since the program started earlier this year over 3.1 million have applied for a short sale and the lender has requested initial documents to process. Out of 3.1 million people only 31,000 have received a permanent loan modification, that's only 1% and well short of the 4 million people our government promised to help!!!! While, lenders and the government guidelines are to blame, it's not all their fault. There are a lot of people that don't send in the paper work or are just plain tired of the headache tying to obtain loan modification and give up.
As I have said in the past, if you don't have professionals helping the public, the success rate of any loan modification program will be low. There is just too much paper work and too much to know for the average American to handle.
Now here is the real kicker. For helping 31,000 Americans lower the mortgage payments lenders have received over $27 BILLION in incentives from the government. $27 BILLION!!!! ARE YOU KIDDING ME!!! If the government would have paid off mortgages of $200,000, they could helped 135,000 home owners pay their mortgage IN FULL!!!!
HAMP has become another bank bail out, with out all the bad press that TARP received. This is amazing, that we would pay $27 BILLION to lenders to help on 31,000 people. And now the government has not only created a similar program for short sales, they have also increase the HAMP funds to $50 BILLION.
The bottom line is, that lenders are getting RICH without providing any service or product, and we are paying for it. The loan modification and short sales that we are paying for, lenders would have done regardless of a government incentive program, as it SAVES them money. And I have heard countless stories and worked on loan modifications for friends that qualify for HAMP and are being denied for no reason, except that they don't help the bottom line of the lender.
If you are working on a loan modification, good luck and hopefully it's the lenders financial best interest.
Since the program started earlier this year over 3.1 million have applied for a short sale and the lender has requested initial documents to process. Out of 3.1 million people only 31,000 have received a permanent loan modification, that's only 1% and well short of the 4 million people our government promised to help!!!! While, lenders and the government guidelines are to blame, it's not all their fault. There are a lot of people that don't send in the paper work or are just plain tired of the headache tying to obtain loan modification and give up.
As I have said in the past, if you don't have professionals helping the public, the success rate of any loan modification program will be low. There is just too much paper work and too much to know for the average American to handle.
Now here is the real kicker. For helping 31,000 Americans lower the mortgage payments lenders have received over $27 BILLION in incentives from the government. $27 BILLION!!!! ARE YOU KIDDING ME!!! If the government would have paid off mortgages of $200,000, they could helped 135,000 home owners pay their mortgage IN FULL!!!!
HAMP has become another bank bail out, with out all the bad press that TARP received. This is amazing, that we would pay $27 BILLION to lenders to help on 31,000 people. And now the government has not only created a similar program for short sales, they have also increase the HAMP funds to $50 BILLION.
The bottom line is, that lenders are getting RICH without providing any service or product, and we are paying for it. The loan modification and short sales that we are paying for, lenders would have done regardless of a government incentive program, as it SAVES them money. And I have heard countless stories and worked on loan modifications for friends that qualify for HAMP and are being denied for no reason, except that they don't help the bottom line of the lender.
If you are working on a loan modification, good luck and hopefully it's the lenders financial best interest.
Tuesday, November 3, 2009
HVCC Ended Appraisal Fraud?
Fannie Mae and Freddie Mac along with the Attorney General of New York created this great program called Housing Valuation Code of Conduct (HVCC) that would solve all the appraisal fraud problems we have experienced over the last few years. While EVERY ONE in the business knew this was bad idea from the beginning the public was unable to let their voice be heard.
HVCC has not only resulted in higher fees and additional headaches for the consumer, a recent report shows appraisal fraud has actually increased by 40%. Another government intervention failure and I know there will be more to come.
When will they learn to talk to experts in the business before they create or pass new guidelines/laws?
HVCC has not only resulted in higher fees and additional headaches for the consumer, a recent report shows appraisal fraud has actually increased by 40%. Another government intervention failure and I know there will be more to come.
When will they learn to talk to experts in the business before they create or pass new guidelines/laws?
Wednesday, August 12, 2009
The Moving Target
As the mortgage industry continues to evolve the toughest obstacle to over come is the constant moving target of loan approval. Tougher guidelines continue to limit home ownership to those who want to buy. Many potential home owners are finding out they may have qualified last month to purchase a home and now they don't OR they are approved for a much lower loan amount. So what can you do to make sure that you are able to buy home today AND next month with guidelines changing so rapidly and often? 
You need to make a budget for yourself and know what you can afford and WANT to pay on a monthly basis. The biggest problem most potential home owners make is they try to purchase a house at their qualifying amount, which is not always what they can afford. Mortgage underwriters only account for the debt that is reporting on your credit and you may have other obligations that are unknown to the underwriter. Make sure you have room in your budget for emergencies and don't over buy. By not over buying you are also protecting yourself from debt to income ratio guidelines changing.
Pay off your debt and save money! I know this sounds like common sense, but you don't how many people purchase new items for their home BEFORE they close or start the approval process. The lower your debt and the higher your savings will help your chances of loan approval when guidelines change. Mortgage underwriters will grant exceptions on certain guidelines if there are compensating factors and the two biggest compensating factors; our your debt to income ratio and savings.
Plan ahead - Once you obtain a mortgage approval it is typically good for 120 days, but you must be approved FIRST. Before you start looking for houses talk with a mortgage professional and obtain underwriting approval. This way if guidelines change, you most likely won't be affected as your loan is already approved. Also, the approval process is taking a little longer then it did six months ago, if you wait to start the approval process until you are under contract you may run in to complications with closing on time.
Finally, be prepared for the loan approval process to be a little more in depth and require more documentation then you did the last time you purchased a house or refinanced. If you haven't obtained a new mortgage in the last 12 months you are going to be surprised/shocked on how different the process is now.
If you have any questions or would like to be pre-approved for a mortgage please call 303.666.6550, email, or visit us online.
http://www.colomortgages.com/
You need to make a budget for yourself and know what you can afford and WANT to pay on a monthly basis. The biggest problem most potential home owners make is they try to purchase a house at their qualifying amount, which is not always what they can afford. Mortgage underwriters only account for the debt that is reporting on your credit and you may have other obligations that are unknown to the underwriter. Make sure you have room in your budget for emergencies and don't over buy. By not over buying you are also protecting yourself from debt to income ratio guidelines changing.
Pay off your debt and save money! I know this sounds like common sense, but you don't how many people purchase new items for their home BEFORE they close or start the approval process. The lower your debt and the higher your savings will help your chances of loan approval when guidelines change. Mortgage underwriters will grant exceptions on certain guidelines if there are compensating factors and the two biggest compensating factors; our your debt to income ratio and savings.
Plan ahead - Once you obtain a mortgage approval it is typically good for 120 days, but you must be approved FIRST. Before you start looking for houses talk with a mortgage professional and obtain underwriting approval. This way if guidelines change, you most likely won't be affected as your loan is already approved. Also, the approval process is taking a little longer then it did six months ago, if you wait to start the approval process until you are under contract you may run in to complications with closing on time.
Finally, be prepared for the loan approval process to be a little more in depth and require more documentation then you did the last time you purchased a house or refinanced. If you haven't obtained a new mortgage in the last 12 months you are going to be surprised/shocked on how different the process is now.
If you have any questions or would like to be pre-approved for a mortgage please call 303.666.6550, email, or visit us online.
http://www.colomortgages.com/
Monday, November 10, 2008
YES, We Are STILL DOING LOANS!!!!
I've never been so amazed on how many people believe every thing they hear on the news. Almost every person that I have met in the last month are amazed that I'm still doing business in the mortgage industry. They all thought that mortgages were near impossible to obtain at this point and were surprised to hear that I was not filing for unemployment. What about the credit squeeze they heard about on the news?
The facts are, that mortgages are still being approved and funded every day. Yes, the guidelines can be tougher in some places and there are a lot of loans that we can no longer due. However, you don't have to have an 800 credit score or 20% down to be approved for a loan. NOT EVEN CLOSE.
There are still 100% financing options available and you don't necessarily have to have GREAT credit to obtain no money down financing. And, YES, you can still obtain a mortgage loan if you can't verify your income. AND, YES, you can still obtain a mortgage for an investment property.
However, lenders will no longer approved loans with layered risk (multiple risk factors). If you don't have great credit and can't verify your income, good luck finding a loan. Or if you want to purchase an investment property with no money down, have fun trying. There are dozens of programs still available (with good rates) that will lend money to people with a lower credit score or can't verify income or don't want to put money down, but you can't have multiple risk factors.
When we look back in 5-10 years at the mortgage meltdown, I believe layered risk will be one of the biggest lessons learned. A lot of these loans are great programs, but there can't be multiple risk factors involved within these loans.
Greg Selters
Mortgage Manager
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/
The facts are, that mortgages are still being approved and funded every day. Yes, the guidelines can be tougher in some places and there are a lot of loans that we can no longer due. However, you don't have to have an 800 credit score or 20% down to be approved for a loan. NOT EVEN CLOSE.
There are still 100% financing options available and you don't necessarily have to have GREAT credit to obtain no money down financing. And, YES, you can still obtain a mortgage loan if you can't verify your income. AND, YES, you can still obtain a mortgage for an investment property.
However, lenders will no longer approved loans with layered risk (multiple risk factors). If you don't have great credit and can't verify your income, good luck finding a loan. Or if you want to purchase an investment property with no money down, have fun trying. There are dozens of programs still available (with good rates) that will lend money to people with a lower credit score or can't verify income or don't want to put money down, but you can't have multiple risk factors.
When we look back in 5-10 years at the mortgage meltdown, I believe layered risk will be one of the biggest lessons learned. A lot of these loans are great programs, but there can't be multiple risk factors involved within these loans.
Greg Selters
Mortgage Manager
Prosperity Financial, LLC
http://www.myprosperityfinancial.com/
Monday, July 28, 2008
Why the Mortgage Bail Out Bill Won't Work?
There has been a lot of hype surrounding the Mortgage Bail Out Bill that is scheduled to be signed by President Bush today. However, it's all been for the wrong reason. Our government has waisted a lot of time and tax payer's money for a bill that will cause more harm than good. I'm not sure how they could get this so wrong and not have a clue.
Why won't it work and what is wrong with the bill?
Why won't it work and what is wrong with the bill?
- To be eligible for the bail out you must have obtained a loan between January 2005 and June of 2007. So if you received a loan prior to January 2005 or after June 2007 you are out of luck.
- To receive help your current lender must be willing to write a portion of your current loan balance, similar to a short sale . If you currently owe $250,000 and your home's value is only $200,000, your current lender will have to write of $70,000.00. Don't get me wrong a lot of lenders will do this, but it's a process and not an easy one. Most consumers will not be able to navigate through the process on their own and very few lenders will be willing to help as it will take a lot of time and very little in compensation.
- The consumer will have to share any appreciation they obtain with the government, up to 100%!!! If the consumer refinances or sales their house with in the 1st year the government would get 100% of the profit. The percentage the government would receive decreases 10% every year there after but is guaranteed to receive at least 50% of the profit regardless when you sale or refinance.
- TIME!!! There will also be a huge back log to obtain approval as all of these loans will have to be manually underwritten. Lenders are already struggling to keep up with current FHA loans that must be manually underwritten and a lot of lenders have placed tight guidelines on FHA loans that they will manually underwrite. I foresee a lot of lenders not offering this new FHA program as they will not be able to handle the workload and/or it will be cost prohibitive.
Not only will the bail out fall short in helping the millions Americans, it has made it tougher for millions of American to purchase a home. The bill will eliminate down payment assistance (DPA) programs that millions of Americans use to help purchase a house AND it raises the the down payment requirements to 3.5%. While I agree with the elimination of DPA this is not the time to do it. We have now cutoff millions of potential home owners ability to purchase a house at time that we are trying to stimulate the housing market. How will this help???
If you are in a house or mortgage that you need to get our of you need to call a mortgage specialist and discuss your options. We will provide a free consultation to review your options and help you develop a plan.
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