Real Estate Marketing Network

FHA Increases Buyer's Costs!

2010-08-09T12:38:00.001-07:00

Let's get to the bottom of it. Congress HAS ALREADY PASSED legislation that will allow Mr. Stevens to increase FHA's infamous mortgage insurance to raise more capital. He has announced, that EFFECTIVE SEPTEMBER 7th, the following changes will occur: FHA's Up Front Mortgage Insurance Premium (currently 2.25% of the loan amount) will DECREASE to 1.00%. Hooray...Our buyers are saving money! OK, now the rest of the story. The monthly Mortgage Insurance rate (currently .55%) will increase to between .85% - .90%. What is the net affect? See the chart below

As you can see, looking at a $200,000 loan at 5.00% interest rate, after September 7th, the loan amount actually decreases to $202,000, from $204,500, however, when you add in the new Monthly Mortgage Insurance, the payment jumps from $1,190 to $1,234. This, effectively increses the buyer's interest rate .33%.

An even scarier proposition is that Congress gave Mr. Stevens the authority to increase the monthly Mortgage Insurance Premium to 1.55%. Illustrated in the chart, you'll see at that rate, a buyer's monthly payment would jump again another $109 or $153 per month more than the current MI rate! Keep in mind, this change begins with FHA Case Numbers issued after September 7th. If you have buyers sitting on the fence and can't decide on a home NOW is the time to pull the trigger before their payment jumps up!

Stay tuned for more information!

Posted via email from AZ FatCats

FHA Increases Buyer Costs!

2010-08-09T12:02:00.001-07:00

In FHA's infinite wisdom, their commissioner David Stevens announced he was implementing changes that will "save buyers money", while raising additional, critical funds necessary to keep FHA afloat. Does something smell funny to you?

If you think something smells fishy, you're not alone. Mr. Stevens says he's going to raise MORE money by reducing YOUR BUYER'S COSTS! You're right - He's only telling HALF the story. (sounds like more of a politician, than a commissioner!)

Let's get to the bottom of it. Congress HAS ALREADY PASSED legislation that will allow Mr. Stevens to increase FHA's infamous mortgage insurance to raise more capital. He has announced, that EFFECTIVE SEPTEMBER 7th, the following changes will occur:

FHA's Up Front Mortgage Insurance Premium (currently 2.25% of the loan amount) will DECREASE to 1.00%. Hooray...Our buyers are saving money! OK, now the rest of the story. The monthly Mortgage Insurance rate (currently .55%) will increase to between .85% - .90%. What is the net affect? See the chart below

As you can see, looking at a $200,000 loan at 5.00% interest rate, after September 7th, the loan amount actually decreases to $202,000, from $204,500, however, when you add in the new Monthly Mortgage Insurance, the payment jumps from $1,190 to $1,234. This, effectively increses the buyer's interest rate .33%.

An even scarier proposition is that Congress gave Mr. Stevens the authority to increase the monthly Mortgage Insurance Premium to 1.55%. Illustrated in the chart, you'll see at that rate, a buyer's monthly payment would jump again another $109 or $153 per month more than the current MI rate!

Keep in mind, this change begins with FHA Case Numbers issues after September 7th. If you have buyers sitting on the fence and can't decide on a home NOW is the time to pull the trigger before their payment jumps up!

Stay tuned for more information!

Loan Originator Licensing... a Good Thing?

2010-07-05T12:39:00.001-07:00

Boy has THIS legislation ever been overdue! Yes, loan originators' licensing is upon us and the playing field has certainly changed! Just a few years ago, it seemed that EVERYONE was in the mortgage business. Just ask your lawn guy or pool cleaner. They too were probably part-time loan officers! Heck, even your Realtor was getting in on the action. However, with the advent of Financial Reform, as of July 1, 2010, only LICENSED MORTGAGE ORIGINATORS are allowed to discuss, negotiate and quote terms for your next home purchase or refinance. A short time ago, there were an estimated 11,000 mortgage loan officers operating both full-time and part-time in Arizona. Many were already in the business operating in a legitimate, career-oriented manner. Others were individuals that only knew of someone looking to buy or refinance a property and wanted "in on the action" to earn a commission. Since the new financial reform laws have passed, only licensed originators are allowed to receive compensation for loan origination services rendered. What does it take to become licensed? Applicants must take and pay for 20 hours of financial classes, pass both the State of Arizona and National loan originators exams, clear the extensive background checks, including fingerprinting and credit review can qualify. What has this done to the pool of originators? Exactly, what it was intended to do. Part-time loan officers have raced back to their steady jobs and only the serious, career oriented producers have remained. What was once a field of 11,000+ in the business has dropped to below 2,000! It is estimated that by the time the State's Department of Financial Instituations catches up on applications, there will be a pool of about 2,600 licensed loan originators. Congratulations to our legislators for getting this one right! By the way, I, Jon A. Achilles am a licensed Mortgage Loan Originator!

Posted via email from AZ FatCats

Loan Officer Licensing... a Good Thing?

2010-07-05T12:02:00.001-07:00

Boy has THIS legislation ever been overdue! Yes, loan originators' licensing is upon us and the playing field has certainly changed! Just a few years ago, it seemed that EVERYONE was in the mortgage business. Just ask your lawn guy or pool cleaner. They too were probably part-time loan officers! Heck, even your Realtor was getting in on the action. However, with the advent of Financial Reform, as of July 1, 2010, only LICENSED MORTGAGE ORIGINATORS are allowed to discuss, negotiate and quote terms for your next home purchase or refinance.

A short time ago, there were an estimated 11,000 mortgage loan officers operating both full-time and part-time in Arizona. Many were already in the business operating in a legitimate, career-oriented manner. Others were individuals that only knew of someone looking to buy or refinance a property and wanted "in on the action" to earn a commission.

Since the new financial reform laws have passed, only licensed originators are allowed to receive compensation for loan origination services rendered. What does it take to become licensed? Applicants must take and pay for 20 hours of financial classes, pass both the State of Arizona and National loan originators exams, clear the extensive background checks, including fingerprinting and credit review can qualify.

What has this done to the pool of originators? Exactly, what it was intended to do. Part-time loan officers have raced back to their steady jobs and only the serious, career oriented producers have remained. What was once a field of 11,000+ in the business has dropped to below 2,000! It is estimated that by the time the State's Department of Financial Instituations catches up on applications, there will be a pool of about 2,600 licensed loan originators.

Congratulations to our legislators for getting this one right!

By the way, I, Jon A. Achilles am a licensed Mortgage Loan Originator!

Why are Interest Rates STILL Low?

2010-06-29T09:29:00.000-07:00

I've been preaching to the masses that interest rates will be rising soon, only to see them recently drop even lower. While I'm sounding like the proverbial used car salesman, it hasn't been without good reason. Let me explain.

Our government has artificially propped up the mortgage market and kept interest rates low by purchasing $1.25 trillion in mortgage backed securities. What does that mean? It means when mortgages are signed and agreements are made with banks, those banks 'pool' those mortgages and sell them as 'mortgage backed securities' on Wall Street. Since the 'mortgage meltdown', nobody would touch those with a ten foot pole, so our government stepped in and agreed to purchase them.

If the government didn't buy these, banks would have to entice investors to purchase them by increasing their return. Investors would demand a higher return for what they perceive as risky investments which, in turn would drive mortgage rates much higher, much faster. Since the Fed's stepped in, the free market system hasn't been put to the test for over a year.

Now that the Fed's buying spree has ended, all signs pointed to rising mortgage interest rates, with economic pressures and unemployment numbers not improving. All signs point to higher rates until WHAM.... Greece's economy starts to tank and the threat of France following in their footsteps hits the airwaves.

What does this have to do with US mortgage interest rates? Well, the world has become a much smaller place and, as they say, "we're all in this together". Investors spread their portfolio worldwide. When funds invested in Europe, specifically Greece and France begin to sour, they look for stronger places to put their money. The US bond market still seems to be a safe haven, although yields are low. Therefore, just as we are expecting mortgage rates to rise, we get a sudden influx of interest into our bond system that strengthens the market, keeping rates in check.

So, the instability of the European Union has helped to keep US mortgage interest rates in check. How long will this last? Who knows? One thing is for sure... if there's one thing we can always count on, it's change!

What a WILD RIDE!

2010-05-08T15:44:00.000-07:00

Wow, did you see that crazy stock market this week? Within a matter of hours, the Dow Jones Industrial Average plummeted almost 1000 points, only to see it come back and recover 650 points back. Oh my! Though it's still not clear as to what exactly sent the sellers into a flurry, the overall volatility of the market reared its ugly head.

Where does that leave mortgage interest rates? Fortunately, in our current state, investors are moving funds back and forth between stocks and bonds. Bonds are what mortgage banks are watching, since they have the most affect on rates. Since loads of money left risky stocks and sought refuge in safer bonds, the prices of bonds rose. That's GOOD NEWS for mortgage rates, but as we said, the prices came right back down.

Overall, mortgage interest rates are hanging on at very low levels, still offering terrific deals for investors and new buyers alike. There's still time to take advantage of these rates, so if you know of buyers sitting on the fence, now might be a great time to jump in the game before we see inflation rear its ugly head.

April 30th is Soon Arriving... Now What?

2010-04-20T08:10:00.000-07:00

April 30, 2010 marks the end of an era. No, this may not be anything life changing, but in the real estate world we live in today, it is significant. April 30th is the last day a real estate purchase contract can be written so that the purchaser of that home can qualify for an $8,000 or $6,500 Federal income tax credit, but that's not all. This is HUGE! Here's why:

When we all witnessed the mortgage meltdown, the real estate industry was turned upside down. Agents and lenders alike saw their business fly out of site as quickly as a mobile home in an Oklahoma tornado! The following year and a half, we watched as the Federal government put together incentives to help support the industry. One by one, those incentives have dissipated until April 30th - the last one goes away.

NOW WHAT? You're not the only one asking this question. Investors on Wall Street are watching closely to see just how stable the market will be once the supports of the government are finally pulled away. At the end of March, the government ceased buying mortgage backed securities, which artificially kept mortgage interest rates at their lowest levels ever. Come April 30th, the Federal government will no longer pay a person to buy a home. Is this good for the market and for our economy? Only time will tell.

Since rates have begun to climb and the purchase incentives begin to fade, it will surely be interesting to see the market's reaction. In my opinion, we will continue to see interest slowly rise. Also, as the market stabilizes, it's only a matter of time that we see housing prices climb. After all, Arizona is STILL a very attractive place to live. Our market will begin to steadily grow, at the rate it SHOULD, not at artificially inflated rates we've seen in the past.

Bottom line: There is no better time than now to get your production in gear! March was better than April, but April, surely will be better than May, June or July! Time is flying by... "There's no better time than the present!"

What's in a FICO Score?

2010-04-01T15:58:00.000-07:00

The Fair Isaac Corporation, in developing their credit scoring model, took a look at credit reports generated over the years in hopes of quantifying consumers’ paying habits in order to predict the future likelihood of performing on their obligations. While nobody can predict the future, they were able to quantify many aspects of past reports to develop an algorithm that now is used by thousands of banks nationwide and millions of consumers alike. Be sure to call your lender should you have questions.
35% - Payment History
One part of a credit score we all understand is the value of making timely payments. There’s no doubt the largest predictor of future payment dependability is the past history of our paying habits. Whether it’s paying on a mortgage, automobile loan or a credit card, the heaviest weight of all is focused on this aspect. As long as payments are made on time, over a third of our score will remain on solid ground.
30% - Amounts Owed
This factor is a bit misunderstood. There is no perfect answer to the amount of credit you should carry, however, a more predictable factor that banks and credit reporting agencies watch closely is the amount of debt you carry IN RELATION TO you total available credit. What does this mean? Banks want to see how responsible you are in managing your credit. If you have been approved for a $5,000 credit limit with a credit card company, how much of that limit do you utilize and what is your history in handling that limit? If you ‘max out’ that credit card, that may be an indication that you are in trouble financially, on the other hand, if you only utilize 30% of that credit limit, it is an indicator that you are more responsible in handling your credit and, therefore, improve your credit score.
15% - Length of Credit History
There’s not a whole lot you can do to change this criteria. The premise behind factoring the length of history is that the longer your credit has been established, the more predictable your habits become. We are all creatures of habit and banks depend on our habits tremendously. A key factor in this, however is our ability to erase some of our credit history; good or bad! If we have a poor history on one account, it would behoove us to do what we can to eliminate that account from our credit file. On the other hand, if we have a good payment history on an account we’ve had for 10 years, we don’t want to close or pay off that account, thereby eliminating that account in our FICO score calculations.
10% - New Credit
New credit can immediately increase the credit score of a young person just now establishing their credit, or it can hinder someone with a 2 year history currently applying for a mortgage. How? Simply adding a three new accounts to an already shallow file may indicate the consumer is “credit happy” and warn the system of impending danger. Since there isn’t a lot of history to review, adding a new batch of liability puts uncertainty into the equation and may lower their score.
10% - Types of Credit Used
Not only do credit scoring models look at your payment history, amounts owed and new credit, but they ‘weigh’ the type of credit you have. For example, a mortgage falling 30 days past due carries a much higher negative burden than a 30 day late on a Sears card. Why? There’s a much higher indication that a consumer is in financial trouble if they let their mortgage go past due, than if they let a small revolving credit line become late.
We can manage our credit scores much more effectively if we know the source of the scoring models. Consider the above factors when trying to improve YOUR credit scores! If you have questions about how to improve your scores, call your lender and trust that you’ll be in good hands.

"Time's Running Out"

2010-03-23T08:24:00.000-07:00

We are inundated with radio, TV an internet commercials about mortgage financing. How is it that every company seems to have the lowest interest rates? Of course, these claims aren't true. No one company can claim to have the lowest rates, because, just like used car companies, your price is only as low as the next company willing to sacrifice profit. Who is the REAL winner? Well, it's not always the consumer!

One thing is for sure about mortgage interest rates. EVERYBODY'S RATES WILL BE CLIMBING HIGHER VERY SOON! This is not speculation, nor is it another feeble attempt to advertise, it is an economic fact and the result of an expiring stimulus program initiated shortly after the mortgage meltdown. Let me explain.

The huge amounts of mortgage investments that were sold through Wall Street, fueling our real estate economy were products called Mortgage Backed Securities. While the 'sound' like secure investments, the soon became almost worthless overnight, when owners of these risky mortgages began to default. In order to keep interest rates in check, the US Government stepped in, agreeing to purchase up to $1.25 trillion of future Mortgage Backed Securities. Since then, we have enjoyed, sometimes record low interest rates, while prices have plummeted. It's the 'perfect storm' for buyers to capitalize on terrific market conditions.

EVERYTHING MUST COME TO AN END. This purchase agreement by the US Government officially ends March 31st. No longer will our interest rates be artificially low. As of April 1st, all the true market factors of supply and demand will kick in and the result should be interesting. Many economists anticipate interest rates climbing a minimum of 3/4% immediately. Others aren't too sure.

My suggestion is to avoid the uncertainty, get off the fence and buy your home, or refinance your current home today! Uncertainty in the marketplace almost always raises prices. For once, we know WHEN that uncertainty arrives!

"FLIP THAT HOUSE!"

2010-02-03T07:37:00.000-08:00

This is a temporary waiver of FHA's "90 Day Flip Rule" and will expire January 31, 2011 unless extended. Following are details of the waiver:
1. The waiver is effective for properties which have been owned less than 90 days that meet the following criteria:
- Must be an arms-length transaction with no identity of interest between Buyer and Seller or other parties participating in the sales transaction.
- LLCs, corporations or trusts as Sellers must have been established and operated in accordance with applicable State and Federal law.
- No pattern of previous flipping exists such as multiple transfers of title within a 12 month timeframe as indicated on the chain of title on the Appraisal.
- Document that property was marketed openly and fairly through an MLS, an auction, For Sale by Owner or developer. Note: Sales contracts which have been assigned to the current Buyer are not allowed.
2. For property sales prices that are 20% or more above the Seller’s acquisition cost the following must be performed: Keep in mind that if the value increases by 100% or more, a second appraisal is required:
- Appraiser must indicate the Seller completed legitimate renovation, repair and rehabilitation work on the subject property to substantiate the increase in value.
- If the work was not performed, Appraiser must provide appropriate explanation of the increase in value since prior title transfer;
AND
3. The Lender must order a property inspection report and provide a copy to the purchaser prior to closing. Property inspections must include, at a minimum, the following:
4. Structure, including foundation, floor, ceiling, walls and roof;
5. Exterior, including siding, doors, windows, appurtenant structures such as decks and balconies, walkways and driveways;
6. Plumbing, electrical and heating and cooling systems;
7. All interiors; and
8. All insulation and ventilation systems, as well as fireplaces and solid-fuel-burning appliances.

Waiver is limited to forward mortgages only and does not apply to Home Equity Conversion Mortgage (HECM) for purchase program.

If you have any questions, please feel free to contact Jon A. Achilles at (480) 688-0656.

2010 Census: Better Safe than Sorry!

2010-01-14T08:29:00.001-08:00

THIS IS PRETTY BASIC ADVICE;

Be Cautious About Giving Info to Census Workers by Susan Johnson With the U.S. Census process beginning, the Better Business Bureau (BBB) advises people to be cooperative, but cautious, so as not to become a victim of fraud or identity theft. The first phase of the 2010 U.S. Census is under way as workers have begun verifying the addresses of households across the country. Eventually, more than 140,000 U.S. Census workers will count every person in the United States and will gather information about every person living at each address including name, age, gender, race, and other relevant data.

The big question is - how do you tell the difference between a U.S. Census worker and a con artist? BBB offers the following advice:

If a U.S. Census worker knocks on your door, they will have a badge, a handheld device, a Census Bureau canvas bag, and a confidentiality notice. Ask to see their identification and their badge before answering their questions. However, you should never invite anyone you don't know into your home.

Census workers are currently only knocking on doors to verify address information. Do not give your Social Security number, credit card or banking information to anyone, even if they claim they need it for the U.S. Census.
REMEMBER, NO MATTER WHAT THEY ASK, YOU ONLY NEED TO TELL THEM HOW MANY PEOPLE LIVE AT YOUR ADDRESS.

While the Census Bureau might ask for basic financial information, such as a salary range, YOU DON'T HAVE TO ANSWER ANYTHING AT ALL ABOUT YOUR FINANCIAL SITUATION. The Census Bureau will not ask for Social Security, bank account, or credit card numbers, nor will employees solicit donations. Any one asking for that information is NOT with the Census Bureau.

AND REMEMBER, THE CENSUS BUREAU HAS DECIDED NOT TO WORK WITH ACORN ON GATHERING THIS INFORMATION.. No Acorn worker should approach you saying he/she is with the Census Bureau...
Eventually, Census workers may contact you by telephone, mail, or in person at home.. However, the Census Bureau will not contact you by Email, so be on the lookout for Email scams impersonating the Census.

Never click on a link or open any attachments in an Email that are supposedly from the U.S. Census Bureau.

For more advice on avoiding identity theft and fraud, visit www.bbb.org

Interest Rates are Moving..... Why?

2009-12-28T14:05:00.000-08:00

Since the passsing of Obama's stimulus package, one of the actions taken was the Fed's move to purchase $1.25 TRILLION in mortgage backed securities. That action was taken to solidify the bond markets, ultimately making sure mortgage interest rates remained stable and low.

The action was successful and, as we know, interest rates have remained very low throughout the year. HOWEVER, THE FED'S PURCHASE PROGRAM IS ENDING!! By March of 2010, the program expires and the 'true' market reaction will hit, almost guaranteeing higher interest rates. In fact, beginning the last couple of weeks, the market is already gearing up for the Fed's phasing out of the program and bond prices have steeply reduced, increasing rates up to 1/2 of a percent so far.

If you are a consumer looking to capitalize on low home prices coupled with low interest rates, NOW IS THE TIME TO ACT! Rates will most likely not come back down for years. Don't miss out on this opportunity!

Look Out World..... I'm BLOGGING!

2009-11-24T08:23:00.000-08:00

"That's one small step for man, one giant leap for mankind"
Step aside Neil Armstrong, Achilles is now online, voicing wisdom and knowledge, while priming the pumps of energy and ingenuity to keep this engine called 'Real Estate' revved and fine tuned! We're all in this gig together and there's no reason why we can't share tips, tricks as well as the traps to improve our production and keep the momentum going.

What momentum you may ask? There's momentum alright. There's activity in foreclosures and short sales - we all know that, but have you seen the new building taking place? That's encouraging! Bidders are lining up for properties priced below $350,000 and investors are scouring the neighborhoods looking for deals. There's momentum for sure.

Where's your niche? Where do you need help? Have you targeted your market? Have you established a web presence? Do you have a game plan? Do you have or need a partner to help steer the ship? Do you have a farm area picked out? How will you market your farm?

We'll be discussing all of the above and I welcome YOUR input to keep the wheels turning!