Election Distractions

Election Distractions



Romney's Home



So I was looking at yahoo.com today and ran across and article showing Romney and Obama's house. What a waste of webspace right? I mean let's look at the real issues here.  WHO cares about what kind of house they live in?

Every company has a CEO and the CEO of America is the Presidency.  The real deal is we really have no choice.  I mean each election season we're forced to choose between candidates from two party's.  You're either on the left or you're on the right.  Well my question is who the hell said I was either?

I can think for myself and I can make my own choices....I don't need someone telling me I have to choose left or right.  What if I came to a fork in the road and I wanted to go straight?

Obama's House

The fact that this is becoming an issue is a one of many election distractions and really does nothing but invoke anger.  Do you agree? Life is so short that, in my opinion, we need to be focused on our relationships; our families, our children, our friends.  All we see now on tv (which by the way I don't watch much tv for this reason) is attack ads and straight crap about this and that related to the 47% comment; Obama's wealth distribution comment; whatever it is they decide to let out (which by the way they've had this stuff just sitting there waiting for the right moment to release it, I mean come on should we believe they "just" found this out?) which is responsible for the swaying of public opinion. It's like a big roller coaster ride until election time.

Now I know you're thinking what in the world does this have to do with mortgage? It really doesn't but the fact that this article focused on Romney and Obama's house is real estate related so I thought I'd share my thoughts on this.

Okay back to my rant....lol.... You can check out the article HERE and develop your own thoughts.  I'm not here to judge about what others think...honestly I encourage people to give their opinions.  Why? Because that's what makes us a great country and people in general.  We're able to express our opinions about topics, ideas, and issues, and really when it boils down to it we stand together strong when circumstances call for it.  With that said all this does is try to divide the country into labels...left vs right.  It's bull if you ask me.

I don't know about you but I'm sick of this mess.  Who doesn't want to live in a nice home; make money; live a life of financial freedom to travel the world and spend time with loved ones and create memorable moments? That's a no brainer. So that day when you reach your death bed and your loved ones are around you; you'll pass with a smile on your face knowing you had meaningful relationships throughout your life and great experiences that bring tears to your eyes just by thinking of them. 

So to have negative feelings around success makes no sense.  We all have goals, dreams and aspirations in life so why not be happy for the people that do make it.  Hell for me..that's an inspiration to want more out of my life; to motivate me towards my goal; not walk around pissed off about it.  Let's get to the real issues shall we.

Real Issues

We live in a country of opportunity where if you apply yourself, create value for others, and put in the work, you can be successful.  Success doesn't have to be material success.  Everyone has their own definition of success but to show these properties and try to invoke anger and division among people I think is ridiculous. 

Lets here about the real issues facing the country and the plans to fix it. We have debt issues, health issues, ecomonic issues, all kinds of things. What's the house or even the cars have to do with it? 

Also the tax return issue; that's another one of those election distractions that irks me to no end. Who cares? The only taxes I'm worried about paying are my own...I mean get real. Who gives a hoot how much taxes Obama or Romney pays? If you think you pay too much in taxes go to an accountant, instead of HR block or Jackson and Hewitt or whoever, and find ways to reduce your tax liability. 

Do me a favor please..turn off the tv go grab your wife, kids - if you don't have that - then girlfriend, boyfriend, grandma, grandpa, whoever, and hug them; tell them you love them and smile... go outside, take a walk and enjoy the day and quit worrying about who lives in what house and how much in taxes someone is paying.

Watch this video and be inspired.

God Bless,





Obama's Refinance Plan (Take Four)

Obama's First Refinance Program

Are you ready for another one of my rants? lol, I promise it will be a good one.


Well here we are folks...first we had the Obamafi 1 (aka HARP 1.0), this come out in 2009 where people with mortgages backed by Fannie and Freddie could refinance into new lower rate mortgages to help
reduce monthly payments and prevent more foreclosures.  The program was launched initially letting
homeowners refinance up to 105% of the homes value with NO add ons.

In the mortgage industry we have lingo - just like any industry - and the lingo related to add ons is loan level pricing adjustments; rate adjusters; bumps in pricing; and several other names.  But the gist of it is - based on certain "risk" criteria - the rate would be higher or lower depending on this information and would be built
into the pricing of the rate to derive at a finalized price.

Well it was well intended at first until the Fannie and Freddie added a bunch of adjusters and people who
needed it most couldn't benefit as they had the lowest scores and highest loan to value (loan amount divided
by value of the home).  So they were hit with massive bumps to the rate and it didn't even make sense to refinance. Well duh.....that's who it was for (the people who could benefit most) but what it ended up being is a cash cow fee generation system for Fannie and Freddie by putting these bumps into the rate and initializing an all out mini refi boom to extract needed cash to help the failing entities. 

Obama's Refinance Plan Take Two

At any rate...time went by and we had it adjusted to 125% loan to value.  Now we have HARP 2.0 or
Obamafi retake numero deuce where now the loan to value is unlimited!  That means your loan amount divided by the value can be 200% or more...doesn't matter, it's unlimited.  This again was another shot in the arm for the mortgage industry and banks are making money hand over fist on this program.  Mini refinance boom two.

This was designed to help all the people who couldn't get in the first time under HARP 1.0 and who were under water more than 125%.  A few programs exist; One was set up for loans serviced by your current lender (which had less restrictive guidelines since they already owned the mortgage) or you could switch lenders.  Now that this plan has been out for a little bit and because the risk is a little higher (actually it should be better because if they would make it beneficial for all everybody's payments would be much lower), some lenders are making it a requirement that the loan being refinanced is serviced by them.

You can find the differences here below:  See the vid.

NOTE: (Video is from youtube and posted by Kenney66)

Obama's Refinance Plan Take Three

The next plan involved changes to FHA's refinance programs.  You can find this HERE This allowed the homeowner with an FHA backed loan who qualified for the streamline refinance, AND, who's mortgage was originated prior to a certain date, could revert back to the old mortgage insurance annual premium calculation allowing them to take advantage of low interest rates. 

As you know FHA loans have been modified significantly over the past few years to help the ailing, failing, mortgage insurance fund as it is now WAY, WAY below Congressional mandated levels so the monthly premiums (also known as MIP and in the Conventional mortgage world PMI) have gone up and up and up so even if you could get a lower rate, the increase in the mortgage insurance didn't make it worth the money to refinance.  So the new program has spawned yet another mini boom. 

Obama's Refinance Plan (Take Four)

Obama's proposed new refinance program (you can find this HERE on the press release from the White House) is targeting all non GSE owned  loans (Fannie/Freddie) to be eligible to refinance into lower rate mortgages.  The proposed minimum credit score is 580 but will this be the same thing? High loan adjusters to the rate making it too pricey for people who really need it to take advantage? Time will tell if it's implemented.

They keep creating new mini refi booms coupled with Ben Bernanke's QE infinity program pretty much guaranteeing interest rates to stay low, we're seeing massive refinance volume. 

The volume has spike so high, lenders can't keep up and they won't hire new people to deal with the volume so you have horror stories of loans taking 90-120 days or longer to close! 

Again, this creating HUGE profits for the banks as they are selling these loans to Fannie/Freddie/and FHA and in turn the agencies are extracting more cash from the system to funnel it into the coffers because they're all BROKE as hell and bankrupt.  Just like this country is but nobody wants to realize or admit it. 

So What Next?

We're rolling into election time; we're starting to see reports of home prices increasing (I don't listen to a thing the government tells me) and the only people I see benefiting are the banks in this situation as people are refinancing which requires closing costs to be rolled back into their loans increasing your balance and stretching your term back out another 30 yrs. 

True, this scenario does help some and true this will benefit some people but if they really wanted to help people out then get rid of ALL adjustments; do it with no limited costs so that the people with the lower scores can benefit like they did when the HARP first came out but was quickly....and I mean QUICKLY changed to requiring all kinds of adjustments to the reates preventing alot of people from saving money on their payments.

So my question is: Where is the cookie for all the people who actually need it?!

That's my two cents on the matter. 

P.S. if you like this blog check out my other one http://www.livingwithnolimits.net

God Bless,

Famous Celebrity Foreclosures

Holy Cow!  I was surfing the web today (like I usually do everyday) searching for some news and came across this article on Yahoo (posting it from Forbes.com) regarding celebrity foreclosures  and I was blown away at some of the stories.

You've got to check it out it HERE and see what I'm talking about.  To think that these people are making millions and millions of dollars and are letting homes go back is asinine! Rhianna was on this list.

She's one of the hottest celeb singers out there right now.  Article goes on to say she did a short sale.  Now I have a big problem with that.  She was more than able to pay for that mortgage on the property but yet was allowed to take a short sale on it.  I don't know about you but I think that's horse sh^!.  Excuse my french but she's worth millions and is just walking away. 

Other big names include were Burt Reynolds and even comedian Chris Tucker!  Wow, I was stunned.  Makes you think what is really going on out there huh?

This is a short post but wanted to share.  Check it out.

Don't forget my other blog - http://www.livingwithnolimits.net

Renovation Financing FHA and Conventional

As I mentioned in a previous post - see The New Real Estate Trend - this will be the next trend as we have a market flooded with foreclosures, short sales, and dated inventory.  I went into a little bit on how this works but lets dive in some more about some options on this and how you can use it to purchase your first or next home.

The common, well known renovation loan is the FHA 203k loan.  This loan has been around for a long time, since the early 80's actually.  In 2005 it was modified to include a "streamline" limited repair program which is for light to moderate improvements such as, but not limited to, carpet, paint, electrical, plumbing, common updates like kitchen's and bathrooms, etc.  You can find that information HERE.

In recent years lenders have teamed up with big home improvement giants like Home Depot and Lowe's to come out with programs that help streamline the process even more for borrowers who work with lenders who offer this.  You can see one of those programs HERE.  Now each lender may have a different process or name or list of documents needed for these programs, this is only one source.

The other type's of Renovation Financing are Conventional options.  Fannie Mae has the HomeStyle and Homepath renovation options.  You can check Fannie's out HERE and Freddie Mac's HERE.

With the Conventional options you can use these for not only owner occupied, ie primary residences, but it's open to investors and second homes.  You can also use this program for luxury repairs whereas on FHA's 203k you cannot.  You will be able to finance at higher loan amounts going up to Fannie and Freddie Mac's loan limits; plus if you're in a High Balance area (temporary increases in loan limits for certain geographical areas) are eligble as well.  FHA still will follow current loan limits based on your county and you can search this online very easily on Google or Yahoo. For your convenience, I've included the link here.

Each lender again will have certain credit overlays - which is guidelines or policies put into place that are more restrictive than the published guidelines from Fannie Mae and Freddie Mac - so I will opt out of including guideline in this post and refer you to inquire more with your lender of choice. 

NOTE: one thing I will caution on; when calling a lender you need to deal with a Renovation Specialist.  What is this? This is a loan officer that only originates renovation loans.  The reason for this is most loan officers do not specialize in these and due to the complexity and additional paperwork required and they do not have enough experience to guide you through it.  When dealing with a specialist, you are dealing with someone who is originating renovation loans on a daily basis. 

With all the changes in the marketplace right now, and guidelines and qualifications changing, and tighter requirements when purchasing lender owned, foreclosed properties, you cannot afford - let me repeat - you CANNOT afford to work with someone who doesn't know how to guide you through the process because this could cause you expensive extension fees and/or your contract being cancelled.

Don't be a guinea pig for someone to learn. 

If you're looking for a good deal; properties that are foreclosed on and can be purchased cheap but need repairs; or even an outdated property that just needs some modern updates - this could be the loan option for you. 

Some of the property types you can finance (and depends on your program) are single family, multi-family, condo's, mixed-use, and manufactured housing to name a few.  Each lender may have it's only credit overlays on the properties they will lend on as well.  Some will still lend on manufactured housing, and some will not. You just need to check with your lender when you call.  There are not many players in the game and many, who see this as the next trend, are getting in so it's important to deal with lenders and loan officers who are experienced in renovation.  This will make all the difference.

Here are some photos of what is actually possible with renovation financing.





Kitchen Remodel

 


Kitchen Update

 




Bathroom Remodel

 


Bathroom Update

 

Next post I'll discuss dealing with your contractor and working with your HUD Consultant on the FHA option.

God Bless,

Fed Unleashes More Liquidity

Just as I mentioned a couple of days ago in my post Mortgage Rates Updated, I said the Fed will keep the faucet flowing baby and with the news hitting today just a few hours ago, this has been confirmed.  The Fed will continue to purchase mortgage bonds to keep rates low and even try to get them lower to fuel demand.

This isn't going to stop ladies and gentlemen.  It's too late to take the foot off the gas now.  The excuse is the Fed will continue, "as expected" to stimulate the economy due to job numbers and economic indicators.  If you haven't seen the article check it out - http://finance.yahoo.com/blogs/daily-ticker/bernanke-bazooka-open-ended-qe3-very-aggressive-says-173314037.html.

As you can see from the article, now, as different in other announcements, this QE is "open ended" meaning no deadline to stop it.  As I mentioned before - call it QE infinite baby!

We're going to continue seeing this as now it's too late to stop it because they won't let the market liquidate all the bad debt and mal investment as this would uncover just how vulnerable alot of corporations really are and how unhealthy the financial system really is. 

If they would just let the system liquidate, it would be really bad for awhile, but would quickly bounce back stronger than before; however this strategy of pumping more and more cash into the system, is just going to lead to an even bigger collapse later on.

Ole Ben Bernanke doesn't care.  All he's concerned with is keeping his special interests and banker buddies happy.  Who benefits from all this? Yea, we have lower mortgage rates (which is good for lower payments but our dollar continues to decline) that are causing a frenzy right now with refinances and new purchases but lenders are not properly staffed which is causing a tremendous amount of backlog and issues getting loans to closing on time for purchases and in a reasonable amount of time for refinances.  Some loans are taking 90 days sometimes or longer to close because so many people are refinancing right now under the HARP 2.0 and new FHA streamline refi programs. 

According to some reports the Fed is saying they are going to keep rates low until mid 2015! Wow! First it was only a year then 2012, then 2013, now mid 2015.  Take a look at the chart below regarding the purchasing power of the dollar since the Fed took over in 1913; the dollar has lost over 96% of the purchasing power it used to have.  This isn't going to stop and countries all across the world are following suit of the Fed pumping massive liquidity into their economies to spur demand.  The only people really benefiting is the corporations and mega banks of the world as they profit hugely from this. 

The stock market sky rocketed today on the news continuting to fuel asset prices.  When will it ever stop? Never baby - hold on to your hats and enjoy the ride becasue you ain't seen nothing yet!

The big boys are making all the money and average saver is losing their purchasing power day by day by day while the Fed helps their bank buddies, big boy corporations, and special interests profit hugely by these moves as they are contrived and planned before the announcement to the public is ever made. 

We'll definitely get to see some rhetoric from Mitt and strutting peacock Barack I'm sure regarding this which continues to fuel the real life soap opera we call the 2012 Presidential Campaign.  The false sense of choice we have between the two candidates is not real choice - it's controlled opposition.  But that is another story for another day. 

Mortgage Rates Updated

I submitted a post in 2009 regarding mortgage rates and I'm updating it again now.  You'll hear all kinds of different perspectives from financial advisors; mortgage gurus; industry groups, etc, but in my opinion rates may have some ebbs and flows as major institutions involved in the MBS market modify their portfolios, but but we've gone past the point of no return.

The Fed is stuck in QE infinite.  In other words.... rates are on lockdown and they can't let up on the gas now baby.  How can they?

Can you see what would happen if they do let rates rise? Ummm - market chaos.  Some are going to read this and say I'm crazy; I'm a conspiracy theorist; I say bull and open your eyes to what is going on.

$16 Trillion in debt; foreign governments defaulting on sovereign debt obligations; war all over; they can't stop the pumping the cash now baby it's all in,  all or nothing.  Trillions have been spent and trillions more will continue to be spent. 

The housing market is a huge part of our economy and they keep stimulating it through controlling the interest rates and driving demand. Stimulus galore!

You want a stimulus package, in my opinion, I would use renovation financing as this is a viable way to keep goods and services flowing through the economy.  See my previous post - The New Real Estate Trend. I'm going to do a series of posts on this subject but in short; you can finance the cost of the purchase of the home and the cost of upgrades and/or needed or desired improvements to the property all in one loan with one payment.

You'll hire a contractor to do the work after closing and you can include (depending on the program) anything from light to moderate repairs to major renovations such as additions and foundational work; and even luxury improvements like swimming pools. 

Through this loan you're purchasing materials, improving the property you're buying (not to mention turning the home into one you love and not just one you like) and putting people to work, ie contractor and their subs.  This is a stimulus package with a private sector approach that really isn't rate sensitive. 

Think about it; most improvement loans you get are tied to high interest credit cards or you already own the home and you secure a second mortgage fixed rate loan or what is called a HELOC (home equity line of credit). The difference is these options look at current equity while the renovation loan uses post-renovation value (future equity). More on these differences in my series of posts to come.

. 

Does that mean you should buy now or wait? I can't answer that, only you can assess your financial situation and make that decision.  They call owning a home the American Dream but the American Dream is what your make it.  Not everyone is ready, equipped, or can afford to buy right now and that's okay.  When the time is right for you you'll know it.

For right now I think the low rate environment isn't going away.  Aside for some market adjustments I don't think interest rates are going anywhere - I don't see how they can.  The Fed knows this and you can tell when every time ole Benny Bernanke gets in front of Congress and testifies, this guy will not say the pump will stop.  He always makes some comment regarding more tools at their disposal and are ready to provide more stimulus if the need is warranted. 

Yeah buddy! That means it isn't stopping any time soon. 

Until next time, God Bless

How To Be Prepared At Application

The mortgage industry has changed quite a bit from a few years and months ago...heck sometimes even just days ago.  Changes are the norm so I'm writing this to help you with the application process as this day in age it's documentation, documentation, documentation and for some people this can become annoying and upsetting at times. 

Do not get upset or frustrated as the industry, one loan at a time, is trying to restore confidence in the marketplace and to investors.  The key to making the process smooth is several fold but the most important thing is your initial file quality at submission on your application for financing. 

The more prepared you are upfront...... the better!

When your loan officer asks for something - get it turned in as quickly as possible so there isn't any delays in the process. 

There is an extreme amount of pressure put on them to turn things around when documentation is delayed being turned in and will, and does, cause for the need of extensions to your closing.  This can be unnerving and complicate things for you.




Stressed!


Everyone's situation is different and sometimes additional documentation is requested. 

Realize that there are some issues, concerns, and compliance requirements on the back end that we as consumers don't see or always here about, so underwriters are checking, double checking, and sometimes over conditioning the loan files; but this is an attempt to make sure all compliance rules and regulations, file quality, and documentation requirements are being met.

When making application make sure you have all of your income and bank account information (to all accounts) available.  Since each loan is different more documentation maybe requested and this is not all inclusive, so in preparation have ready:

• The last three years of income tax returns (make sure page 2 is signed and include business returns if self-employed), w2's (all w2's for all jobs) and a full months of paystubs.

• Be prepared to explain any changes in income or if you've had multiple jobs in the last 2 years

• Bank statements should be all pages even if one says "intentionally left blank"

• Be prepared to explain any credit inquiries you've had recently and if any new debt was acquired from this inquiries.  People ask about this all the time but the idea is if more debt it out there that is unknown, this has an impact on your debt-to-income ratios and your ability to repay the mortgage

• Be ready to explain any large and unusual deposits into your account (untraceable cash deposits are not acceptable) to prove they are from an acceptable source.

• Explain any derogatory or late payments on other credit accounts and collections

Again, this is by no means all inclusive but is a short list of items you'll need and other things to be prepared for when meeting with your loan officer.  The better quality your loan file is at submission, the smoother your process will be. 

Remember - there are many parts of the process that are not under the control of the lender so communication is key as everyone is working toward the same goal - closing.


God Bless,

The New Real Estate Trend

What is the next real estate trend? You can ask many and you'll get many answers.  As a professional in the business I can tell you that I see renovation as the next trend for the coming years.  Why?

• Aged inventory - many houses are old, have not been updated which includes kitchens, bathrooms, plumbing, HVAC, and could really use a face lift.
• Foreclosures galore! The market is saturated with foreclosed REO properties that need repairs.
• Older homes with outdated floor plans or are too small compared to other homes in the area (by the way part of the renovation process can include adding square footage to the property through an addition to home)
• Can add a personal touch to make it yours - turn a home you just like into one you love
• Many homes with health or safety violations or hazards which can be remedied through renovation
• Many many more reasons.

So what can be done about it? Well you can call it a secret (not really) but a program that has been around since the 80's - the 203k (no this isn't like your 401k) - allows the for the purchase of the property plus the cost for repairs to be rolled into one loan, one payment, and your maximum mortgage is based on the post-renovation value.  This is a little known loan through FHA and 203k is simply just the section of the act (the National Housing Act) for the program just like the 203B is the "regular" or "normal" FHA loan we've all grown to know very well.

Especially since the housing debacle and Conventional financing has tightened up; more people are getting FHA insured loans.

So you can literally turn this

and even this

into this

and even this

Now you're probably thinking..."yea right, that looks nothing like the other houses." But yes you can do this (turn ugly into stunning). 

You can do anything from light to moderate repairs (kitchen and bathroom updates) to more major renovations like foundation work, and even tearing the house down and rebuilding on the same foundation. 

With the 203k you just can't do anything consdered "luxury" repairs in nature like a gazebo, hot tub, or install a swimming pool. The key to this is after-improved value - which is the home will be comparable in it's renovated state to other properties in the area.

This doesn't mean build a 6 bedroom home in a 3-4 bedroom market, however if you wanted to change the design and floor plan of the property and make a major renovation you can. 

There are so many things you can do with this type of financing.  By the way FHA isn't the only one that has this program available.  Very close versions of this are available in the Conventional world through Fannie Mae and Freddie Mac but most lenders do not offer this type of financing. 

I think you'll see that change as this piece of the market explodes over the next few years.

One word of advice that I caution people looking to obtain this financing:

MAKE SURE you are working with a specialist.  The reason is they work with these loans daily and a specialist only originates these loans.  You'll have many originators that "dabble" with these loans and only do a few a year vs a specialist who originates these on a daily basis so they are knowledgeable of the intricacies of the program and have a system in place to take you from application to closing with very few, if any, hiccups.

Don't be a guinea pig and search out a specialist.  This should be your first question to the loan officer.  If they are not a specialist ask if their company has one and if not - move on and don't waste anymore time. 

Not all lenders have the same guidelines; some will have what is called credit overlays, meaning they have tighter guidelines than the published FHA guidelines on the program.

I will do a series of blog posts on this, since it will, and already is becoming, a hot topic.  There is much to talk about, so you can be prepared and armed with information when approaching your lender for a renovation loan request.

God Bless

P.S. if you like this blog check out my other blog http://www.livingwithnolimits.net