It’s the Little Things…

Often times it is the little things that can trip a deal up from time to time.  Sometimes understanding how these little things can impact a deal up front can either make a deal or break it.  Here are some recent updates from Freddie or Fannie that can impact your clients.

Deferred Student Loans – Fannie Mae will now allow lenders to use just 2% of the outstanding balance as the payment for qualifying the borrower.  In many cases, borrowers do not know what the payment will be or have difficulty obtaining the information; this should help to expedite the loan process.  On the flip side, 2% could be more than the actual payment.  In that case, it may benefit the client to document what the deferred student loan payment will be when repayment starts.

Non Applicant Debts – Fannie Mae will count this credit history and debt against the borrower unless documentation can be provided they are not responsible for the account.  This is one more reason that a pre-approval is essential to a successful transaction.

Using Assets to Qualify – Freddie Mac will now allow retirees to count a portion of the retirement assets as income to qualify for a mortgage.  In addition, clients who have received lump sum settlements from the sale of a business can use those assets as well provided certain conditions are met.  This is a small but important change that may benefit specific borrowers.

Repairs Not Completed Prior to Close – Freddie Mac will now allow borrowers to close with certain items on the home purchase being incomplete.  The repairs cannot affect safety, soundness or habitability.  The repairs cannot exceed 10% of the as completed value of the property either.  Call me for all of the specifics as this is may give some of your buyers the flexibility they need.

Manufactured Homes That Have Been Moved – Freddie Mac will no longer purchase loans when a manufactured home has been moved.  If the home was delivered to the site brand new, it remains eligible.  If the home was previously in a different location and was moved, it is no longer eligible.

Homes That Were Built Around a Manufactured Home – Freddie Mac also requires that homes that were built around an existing manufactured home structure meet all of the guidelines for a manufactured home, even if the appraiser is considering the home essentially a stick built home.

I don’t expect you to be the expert on all of these items.  You can count on us to keep up to date with all of the latest rules to insure you and your clients don’t get tripped up as part of the mortgage process.  Don’t hesitate to call me for details on how I can best assist you.

Market Condition Appraisals

What the New Market Condition Appraisal Is All About

 

It’s now required on every appraisal!

 

Conventional, FHA or VA appraisal…they all require this new form.

So what is it?

 

It’s a comprehensive worksheet created by Fannie Mae that supports an appraiser’s neighborhood market trend determination of Increasing, Stable or Declining.

PLUS

FHA has additional comparable requirements for a property in a

declining market:

• Two comparable sales closed within 90 days prior to the                                                                    effective date of the appraisal (or a detailed explanation if                                                                                   not possible) AND
• A minimum of 2 active listings or pending sales in addition                                                                           to the 3 sold comps normally required.

What does it all mean to you?

 

• Your accurate and timely MLS data input is more important than ever.

• Return appraiser calls promptly to assist them with verification.

• It’s a tough market for everyone – even appraisers are learning how to complete the new forms.

Fannie/Freddie/FHA/VA/USDA – Maximum Seller Contribution Chart

Fannie/Freddie/FHA/VA/USDA

Maximum Seller Contribution Chart

 

With all the mortgage rules changes, I know it’s difficult to keep updated on exactly how much money a seller can contribute to helping a client buy a home.  Here’s a handy chart that covers all the loan programs and the percentage the seller can pay.

Is There an Economic Crisis?

“It’s a small world after all.” The wild ride over the last few weeks continued again last week, as the US markets danced to the tune of the European debt and economic crisis. Here’s what it means to home loan rates here in the US.

Even inflation hasn’t stopped Bonds. Last week, consumer inflation and producer inflation came in above expectations. Remember inflation is the archenemy of Bonds and home loan rates, so hotter inflation would normally negatively impact Bonds and home loan rates. But even last week’s inflation news didn’t impact Bonds.

Seeing Bonds dismiss that inflation news indicates that the Bond market senses that the economy (which is already hardly growing) is in a very vulnerable position with things in Europe uncertain and gloomy at best. And when the situation deteriorates further, it may push many world economies into a recession.

It’s all about Europe. US Bonds – including Mortgage Bonds – have been seen by the markets as a safe haven bid on existing and growing fears that Europe’s debt crisis is coming to a head…and global growth, which is already anemic, is being threatened further. Not helping the situation was the news last week that there is no concrete solution to the European debt problems. Last week, French President Nicolas Sarkozy and German Chancellor Angela Merkel met. However, following the meeting, Sarkozy stated that “EuroBonds can be imagined one day, but at the END of the European integration process, not at the BEGINNING.”

That was a pretty clear message to the financial markets that the creation of a EuroBond is not within the remote daydreams of Germany, which is the strongest nation in Europe and who will determine whether it gets created or not. So let’s be clear, the German taxpayers want no part of a EuroBond, since it would use the surplus that Germany has worked hard to create to fund the poor habits and debt of weaker and less responsible member States.

The bottom line is that the fear and uncertainty right now is pretty overwhelming, which is supporting Bonds and home loan rates. But Bonds are at “nose bleed levels” and sentiment can change very quickly. If you or someone you know has been considering refinancing or purchasing a home this is an ideal time to look at their unique situation. It only takes a few minutes to look at the options that are available right now.

Live in Utah? Protect Your Trees During the Winter

Everyone changes routines for the winter, even your trees and if you live in Utah, you know the cold winter temperatures can be torture on your trees and shrubs. As the temperature and light hitting the leaves change, your tree begins a complicated process of preparing for winter. Contrary to popular belief, the tree does not completely stop its activity but merely slows its metabolism – yes, trees have a metabolism. There are a few simple and easy steps you can take to increase your tree’s overall well being and happiness during the winter.

• Pruning
  Removing dead or diseased limbs in the fall will let you control the tree’s shape and give it strength in the spring. Limbs that hang low or even touch the ground should be removed as well. These branches may break or allow bugs easy access to your tree.
• Mulching
  The most obvious enemy of your tree during the winter is the freezing cold temperatures. Extreme cold combined with fluctuations in the temperature can cause unwanted and unnecessary damage. Mulch can keep your tree protected from extremes and swings in the temperature at the base of the tree. The best way to determine how much mulch you need is to look at the trees branches. As far as they spread is as far as you should apply mulch in a thin even layer.
• Fertilizing and watering
  Use a balanced fertilizer that’s made for your climate, but avoid using too much nitrogen as this can cause a burst of growth even in late fall. Watering your tree in the dead of winter may not be something you consider doing. However, droughts in the winter are just as bad for your trees as they are in the summer. When the ground is not frozen it’s okay to water your tree. Just be careful not to apply too much water as it’s easy to overwater your tree in the winter.

Dormant Sprays
Deciduous trees, ornamental trees and fruit trees may require a dormant spray. Spray your tree after you’ve pruned it to avoid throwing away limbs that you’ve treated. Talk to your favorite nursery to determine the correct chemicals or oils that are best for your tree.

Questions about a Utah home loan or refinancing your Utah home?

Give us a call at (801) 253-4663 or send us an email at kelly@utahsmortgageguy.com. We’re glad to answer questions — no obligation, of course.