Property Condition When Selling A Property

When you plan on selling a property, it’s important to remember that most buyers will have to take out a mortgage to buy your property.  When a mortgage company or bank looks to help finance a property for a buyer, an appraisal will be necessary to show condition of the property.  If there are any condition problems that the lender doesn’t allow, this can delay the closing of your property or kill the deal.

Make sure you understand what major items a lender will look for in the condition of a property, when a buyer is taking out a mortgage.  Here is a good list of items that you should review, if you plan on selling your property anytime soon.

 

Major Items to Check on Your Property

  • Roof – Lenders are looking for leaks and major damage or major deterioration.
  • Windows/Doors – Make sure they are not broken and are working properly.
  • Basement – Make sure there are no signs of major cracks or movement in the walls.  Foundation issues can really cause problems when it comes time to sell your property.
  • Walls – Make sure the walls don’t have large holes, signs of water damage or unfinished.
  • Repairs – Any repairs or improvement projects must be complete.  You don’t necessarily have to have the trim installed, but all fixtures need to be installed.
  • Heating – This must be in working condition.  It doesn’t have to be new, but it must work.
  • Water – This must be working and flow through the house, without any leaks.
  • Hazardous Conditions – Make sure some items like, methane gas, lead paint, radon gas, radioactive material, landfill, toxic materials, etc. are not in or on the property.  This can cause big concerns with the lender.

It’s always recommended that you have your home inspected by a licensed home inspector.  This way, you will have peace of mind that there will be little to no problems with the condition of your property when the buyer uses a lender to buy it.

With Refinance Booming, VA Loan Volume Hits 18-Year High

VA loan volume hit an 18-year high in the fiscal year that ended in September, according to data recently released by the Department of Veterans Affairs.

The significant increase — both historical and year-over-year — is another sign that military borrowers are moving away from the tighter conventional lending space and toward the VA loan program’s more flexible credit and income requirements. Loan volume jumped 51 percent from FY11 to FY12, spurred in large part by a boom in refinance loans.

VA loan growth

Record-low interest rates have made the VA’s Streamline and Cash-Out refinance programs increasingly attractive. In some cases VA-approved lenders are able to process Streamlines without an appraisal, which continues to help qualified underwater homeowners take advantage of low rates.

Here’s a look at how VA loan volume has changed in the last five years alone:

FY12: 539,884
FY11: 357,592
FY10: 314,011
FY09: 325,690
FY08: 179,670
FY07: 133,313

The continued growth of the VA loan program comes as consumers continue to face tighter lending requirements in the wake of the subprime mortgage meltdown. Generally, VA lenders are looking for a credit score of at least 620, and the program offers financial benefits such as $0 down, no private mortgage insurance and higher allowable debt-to-income ratios.

Flexible requirements

Many military borrowers can struggle to hit the credit and/or down payment requirements necessary to secure conventional or even FHA financing. The average credit score on an FHA denial in May was 669, according to the National Association of Realtors. More than half the conventional loans issued in August went to borrowers with at least a 740 score.

Every state experienced at least a 25 percent increase in loan volume. Some military-dense states posted big gains in particular, including Hawaii (89 percent), Virginia (69 percent) and California (65 percent).

Dog Days of Summer Likely to See Deluge of Short Sales

Housing and finance experts are predicting the dog days of summer are likely to produce a deluge of short sales.

“We’re seeing a rush already,” Daren Blomquist of RealtyTrac told Reuters. “There was a big increase in the first quarter and we’re expecting that to continue.”

The crush of short sales comes as more and more banks opt for a portion of what they’re owed rather than have a property go into foreclosure. The Obama administration has advocated short sales as a solution for both financial institutions and sellers.

RealtyTrac data shows short sales in the first quarter of 2012 were up 25 percent compared to the year prior. The total — 109,521 — represented a three-year high. In fact, 2012 may serve as the high-water mark for short sales.

Tax Break Ending

Homeowners considering whether to pursue a short sale are also staring down the calendar. Normally sellers in a short sale see their forgiven loan amount counted as taxable income. A temporary governmental provision suspended that to help unclog the foreclosure pipeline, but the tax break comes to an end this year. Short sales can often take months, which means prospective sellers need to move soon in order to retain the tax break.

They also need to begin the process with their bank. Most sellers will take a credit hit of anywhere from 85 to 160 points and be precluded from obtaining home financing for several years. Veterans and other VA-eligible borrowers will have to wait two years before being eligible for a VA-backed mortgage.

Short Sale Market

Short sales continue to be a great deal for buyers with the credit and income to secure home financing. Prices on distressed properties are often 2o to 25 percent less than non-distressed properties, but there’s increased competition on short sales, which tend to be in better shape than foreclosures.

Buyers expecting to land a deal may need to rein in their optimism and come prepared with a serious offer.

Is a Simpler Mortgage Application Process On the Way?

Regardless of what type of loan you are interested in getting, the paperwork and process of getting a loan can be confusing. Sure, there are different types of loans (popular ones include VA loans, FHA loans, Conventional loans and jumbo loans) and the paperwork will be different for each type of loan – but that is not the only confusing part of the process. Each lender has different “overlays” which means getting an FHA loan from one lender may follow a slightly different process than getting a loan from a different lender.

To further complicate things, there are mortgage brokers, bankers and large banks — and each one has their own process to follow that can be confusing.

Lucky for consumers, the CFPB has been established to hopefully make the entire process simpler regardless of what type of loan you apply for.

The Consumer Financial Protection Bureau (CFPB), established following the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, was implemented specifically to create, implement and enforce laws that protect consumer interests as they pertain to financial dealings, including mortgage applications.

As a direct response to complaints from consumers that they did not receive ample information or assistance from their lenders, the Bureau recently unveiled plans to simplify the mortgage application process and to provide increased protection for consumers who are taking out high-cost mortgages. If implemented, these regulations will provide the transparency needed for consumers to avoid costly hidden fees and uncertainties during the home-buying process. The proposed regulations currently open for public comments, and the final version of the regulations should be finalized by early 2013.

What the New Regulations Entail

Until now, federal law has demanded that loan applicants receive two sets of similar forms, one required by the Real Estate Settlement Procedures Act (RESPA) and the second required by the Truth in Lending Act (TILA). Aptly dubbed “Know Before You Owe” mortgage forms, the CFPB’s proposal would continue to require two sets of forms, but the information contained within would be less repetitive, such that one form would focus entirely on stipulating the closing costs, while the other would describe the mortgage process as a whole, including the costs and risks, information which would hopefully reduce the risk of foreclosure or defaulting on the loan.

The new forms proposed by the CFPB have been reviewed by both consumers and mortgage professionals, and have received thousands of comments from the public. Ten rounds of testing have been done in order to fine-tune the documents to ensure that they address the issues as clearly and concisely as possible. The CFPB website current presents the proposed forms for public feedback which can be submitted until November 6, 2012.

In addition to changes in the paperwork required when applying for a mortgage, the CFPB has proposed that mortgage lenders adjust the paperwork presented to borrowers in the form of monthly statements, so that moving forward, each monthly mortgage statement would include a breakdown of the different aspects of the mortgage payment such as interest and principal, as well as information listing where borrowers can seek help if they are concerned about their ability to pay their mortgage.

In the same vein, the new regulations would also require lenders would to inform borrowers in advance of any upcoming interest rate hikes, and to provide suggestions as to where the borrower can receive assistance if he or she expects that the rate hike will make the monthly payments unaffordable.

If implemented, the CFPB will monitor lenders to ensure that they respond to all borrower inquiries within a defined time period, a measure aimed at preventing borrowers from entering foreclosure simply because they could not connect with their lender to find an alternate solution which may include refinancing, speaking with a HUD (US Department of Housing and Urban Development) counselor or filing for government assistance.

Finally, the CFPB is working to protect borrowers taking out high-cost mortgages by restricting fees for late payments or modifying the terms of the loan, and requiring loan counseling for all recipients of high-cost mortgages. Public comments about the new stipulations for high-cost borrowers can be submitted to the CFPB until September 7, 2012.

Whether or not the proposed CFPB regulations are actualized, it is critical for mortgage borrowers to understand their options as they pertain both to borrowing conditions and repayment options during an unexpected financial crisis. Those who are unsure about their options or who don’t feel comfortable making a final decision should be encouraged to seek additional advice or to review the material presented so that they can make a comfortable, informed decision before committing to a long term loan.

Mortgage Applications Strong But Slightly Down

The Mortgage Banking Association announced that mortgage applications dropped 7% week over week for the week ended June 22nd in their weekly survey, which covers more than 75% of all U.S. retail residential mortgage applications. Refinance itself had dropped 8% from the previous week, while purchase inquiries fell 1% from the week previous on a seasonally adjusted basis.

Mortgage rates are still extremely low, but the market overall saw a dip downward in a natural response to an influx of application volume last week from the new FHA streamline refinance mortgage insurance requirements – requirements that markedly lowered mortgage insurance for homeowners that had FHA-backed mortgages endorsed by the FHA before June 1st, 2009.

This new guideline allowed homeowners backed by the FHA before June 1st, 2009 to pay an upfront mortgage premium at close equal to only 0.01 percent of the loan size (otherwise known as 1 basis point). This would mean only a $10 upfront mortgage premium (MIP) to be paid by the homeowner at closing.

Compare this to refinancing for FHA-backed loans endorsed on or after June 1st, 2009, where mortgage premium at close is 175 basis points, or 1.75% of the loan size. For a loan of $100,000, the homeowner with an FHA mortgage before June 2009 would pay only $10 for their mortgage insurance premiums, while the homeowner with the FHA mortgage afterwards would pay $1750!

New FHA Streamline Guidelines Cause a Mortgage Application Roller Coaster

It’s no surprise, then, that the announcement of these new FHA Streamline Refinance market created a large mortgage application influx in the market when it came into effect on June 11th, 2012.

“Refinance volume fell last week due largely to a fall-off in refinance applications for government loans, which had more than doubled the prior week. The large swings in activity were due to the implementation of FHA’s new premiums on streamline refinances, and borrowers timing their applications to lower their premiums.”

Michael Fratantoni, MBA’s Vice President of Research and Economics

This reality can be seen in the data, as the proportion of refinance mortgage applications, previously at 80% of total, dropped to 79% week over week. Overall mortgage rates were pretty much static for the week, which didn’t help refinance or purchase rates improve in volume.

On the purchase side, the volume drop of 1.4% reflects that the real estate market is not yet booming back, as the purchase volume is a leading indicator of home sales nationally. The original expectations by the MBA for the purchase market to rebound starting at the end of 2012 and into the 2013 have since been changed to less optimistic tones, as the future state of the purchase market still seems in flux.

Making a Decision on Your Mortgage

Given what you know about the mortgage market, the takeaways from the recent fluctuations for your loan should be fairly clear. If you have a FHA mortgage loan backed before June 1st, 2009, enjoy the lower closing costs you will now face. If you aren’t so lucky, the market is overall well-conditioned for a refinance of your loan if you haven’t already been taking advantage of the low mortgage rates.

On the purchase side, things are still unknown. Looking at a new home from a real estate investment is still possible, but the risk condition is still there with no clear, immediate signs of recovery. Do your research and act accordingly for the best future health of your mortgage.

Are You One of the 19 States? USDA Refi Pilot Program!

Good news. If you currently have a USDA loan, call me about the new refinance program.

  •  No credit report,
  •  no appraisal,
  •  no property inspections,
  •  no income verification.
  • Last 12 months mortgage payments must be made on time.
  • Interest rate must be 1% below current rate borrowers are paying now

With the issuance of AN4615 on February 1, 2012. USDA Rural Development announced a new refinance pilot program  designed to help existing Section 502 borrowers, for both the 502 direct and 502 guaranteed loans, to refinance their homes with greater speed and ease. I like what RD is trying to accomplish under this new refinance pilot initiative but I wish it was available in all states, not just the 19 selected. You can bet that many states outside of this select group and those distressed homeowners living in them feel they are just as deserving.

Only 19 States Allowed in USDA Pilot Refinance Program  – Additional States are not eligible at this time.

  • Alabama,
  • Arizona,
  • California,
  • Florida,
  • Georgia,
  •  Illinois,
  • Indiana,
  • Kentucky,
  • Michigan,
  • Mississippi,
  • Nevada,
  • New Jersey,
  • New Mexico,
  •  North      Carolina,
  • Ohio,
  • Oregon,
  •  Rhode Island,
  • South Carolina,  
  • Tennessee.

Eligible Borrowers: Current Section 502 Direct or Guaranteed Loan borrowers must:

  •  Meet current income eligibility requirements (Comment: While applicants for the program must still meet the income eligibility criteria, repayment income is technically not a factor in that an USDA RD grants an automatic ratio waiver)
  • Reside in an eligible rural area or an area that was eligible at the time of the original loan closing (Comment: In other words, even if the area where the property is located is no longer eligible you can still refinance under this program); and
  • A Rural Refinance Pilot loan may only include the principal balance of the loan plus a portion of or the full upfront guarantee fee. The applicable upfront refinance guarantee fee is 1.5 percent. No cash out is permitted to the borrower. Accrued interest, closing costs, lender fees, and late fees are not eligible to be part of the refinance loan. (Comment: This means that only the principal balance of the loan may be refinanced with only the 1.5% guarantee fee added to the loan amount. All other costs associated with loan must be either paid for by lender premium pricing or the borrower. In this case, I foresee many lenders pricing the loan in such a way as to allow them to pick up much of the borrowers closing costs. For the 502 direct program borrowers any subsidy recapture cannot be included in the refinance loan. RD however could subordinate the subsidy recapture amount)
  • Rural Refinance Pilot loans must be manually underwritten. They cannot be processed through the Guaranteed Underwriting System.

Really detailed information can be found www.MortgageCurrentcy.com (Trial subscription $1 for 7 days)

If you are located in one of the 19 states, go through your database.  This could be easier than HARP–especially if they “fit” the 1% rule and 12-month, on time payment requirement.  Karen Deis, Publisher.

VA Loans Still Safest Product on the Market

The Department of Veterans Affairs issued a news release this week trumpeting the continued growth of the VA Loan Guaranty program. The agency backed just under 360,000 loans last year, a 14-percent increase from FY10 and a whopping 168-percent increase since FY07.

But that wasn’t the only good news. The release also noted that VA loans have had the lowest rates of foreclosure and serious delinquency for the past 14 quarters and 11 quarters, respectively, according to the Mortgage Bankers Association National Delinquency Survey.

Those figures are even more surprising considering that about 90 percent of VA loans come with no down payment.

“The continued strong performance and high volume of VA loans are a testament to the importance of VA’s home loan program and a tribute to the skilled VA professionals who help homeowners in financial trouble keep their homes,” Secretary of Veterans Affairs, Eric K. Shinseki said in the release.

The VA works closely with borrowers and their servicers to avoid foreclosure. Veterans in jeopardy should always contact their loan servicer first, but the VA provides services and staff to help borrowers pursue options like modifications, forbearances and repayment plans. Homeowners can call 877-827-3702 to talk with a VA specialist.

“We are committed to making even more veterans and service members aware of this important benefit and delivering the assistance they deserve when financial difficulties arise,” said VA Under Secretary for Benefits Allison A. Hickey.

 

HARP Refinance Program – Underwater Homeowner’s in Atlanta Get RELIEF!

 Atlanta HARP RefinanceUnderwater Homeowner’s in Atlanta Get Refinance Help from Obama Administration

Atlanta, GA (January 2012) – Originally launched in April 2009, the Home Affordable Refinance Program (HARP) was designed to help underwater homeowner’s take advantage of low mortgage rates even if they were low equity or slightly upside down.

By allowing underwater homeowner’s the ability to take advantage of today’s lower interest rates without have to pay down their equity the HARP program was intended to help homeowner’s save money which they would them use to purchase consumer goods or create new jobs.

Sounds like a good idea right?

It was. HARP 1.0 helped a lot of people refinance. It was limited though. There were restrictions, price adjustments and loan to value caps that prevented a lot of Atlanta homeowner’s from benefiting.

One of the biggest issues with HARP 1.0? It was limited to your current mortgage servicer, you had to deal with a big 4 bank. Welcome to your own personal hell.

90+ days turntimes? CHECK. Multiple requests for the same documents? CHECK. Days waiting for you loan officer to return your call? CHECK. Three weeks before an initial decision? CHECK.

Enter HARP 2.0

Limited to a big 4 bank? Not anymore! The new HARP program is opened to all participating mortgage lenders. You can now use the mortgage professional YOU want to use for your HARP refinance. No more 3 month turn times to get your HARP closed. Does 3 weeks sound better than 3 months?

Loan to value restrictions? Gone! No equity, no problem. It does not matter how upside down or underwater you are, HARP 2.0 has no restrictions on loan to value.

Not an Owner Occupant anymore? No problem! HARP 2.0 is available to all homeowners. Second homes, investors, people that have relocated can now take advantage of today’s low rates.

Sounds good right? How do I know if I am eligible for HARP?

HARP 2.0 Eligibility & Guidelines

HARP, sometimes referred to as DU REFI+ or the Obama Refi plan, has some basic eligibility guidelines that potential refinance homeowner’s must meet

In order to be eligible for the HARP refinance program :

  1. Your loan must be backed by Fannie Mae or Freddie Mac.
  2. Your current mortgage must have a securitization date prior to June 1, 2009
  3. You must be current on your mortgage with no late payments in the last 6 months.

If you currently have an FHA, VA, USDA or Jumbo loan you will not be eligible to participate in the HARP 2.0 refinance program. You may have other refinance options, but HARP is not one of them.

No LTV Restrictions for HARP 2.0? Really?

Yes, there are really no loan to value (LTV) restrictions! Even if you are ridiculously underwater, so long as you meet the HARP | DU Refi Plus eligibility requirements outlines above you should be eligible to participate.

Even if you are currently at 200+% LTV you can still benefit from Obama’s Home Affordable Refinance Program. Ready to see if you meet HARP Guidelines? Stop waiting, click below for a HARP 2.0 consultation and we will let you know your refinance options.

Get a HARP Rate Quote Now!

Florida HARP Refinance

Are you one of the 300,000 Atlanta homeowner’s underwater? Keep your house, explore a HARP Refinance, learn how Obama’s Home Affordable Refinance Program can help you!