Great Advice

Here is a great article from Liz Pulliam Weston of MSN Money concerning how a mortgage can get killed before it's even started. With today's tougher guidelines for underwriting it's more important than ever before to be aware what is out there.

Enjoy!


Ten Things That Can Kill a Home Loan
By Liz Pulliam Weston

The mortgage world has changed dramatically in a few short years.

At the peak of the real-estate bubble, mortgage professionals joked that you needed only to be able to fog a mirror to get a loan. These days, even borrowers with good incomes and good credit scores can get turned down.


Much of the change is driven by the higher standards of the companies that buy mortgage loans, including Fannie Mae, Freddie Mac and various large banks.

Here's what you need to look out for if you're trying to land a mortgage, whether you're buying a home or refinancing:

1. The house needs too much work.


A lot of properties on the market these days are foreclosures owned by banks, and many aren't in great repair. (See "Should you buy a foreclosure?") If a house is in really bad shape, it can be tough, if not impossible, to persuade another lender to give you the money to purchase it.
Broken windows, defective appliances, roof leaks and serious water damage can all cause a lender to bail, said Dick Lepre, a senior loan officer with RPM Mortgage.

"A lot of deals just fall apart" after appraisers examine the homes, Lepre said. "Some sellers have gotten shot down so many times because the buyers couldn't get a mortgage that some homes are put on the market as 'all cash.'" In essence, the sellers won't consider buyers who need mortgages to purchase their homes.

In the past, Lepre said, a lender might have been more willing to set aside some of the cash from a deal to pay for necessary repairs. Today, lenders are far more likely to simply refuse to do deals.


Bottom line: If it's a real fixer-upper, you may need to pay cash.

2. The appraisal came up short.


Occasionally during the bubble an appraiser would decide a home was worth less than the price a buyer and seller had agreed upon. But that was relatively rare. Critics accused appraisers of colluding with lenders to "hit the number" -- deliver the values needed for loans to be approved.
Some appraisers acknowledged the pressure, saying banks would turn to their competitors if they didn't hit the number.


These days, the situation is drastically different. New rules hold appraisers to higher standards and sharply limit communication between appraisers and lenders. So the appraisal on the home you want to buy may fall short of the agreed-upon selling price.Even if the first appraisal goes well, Lepre said, a second evaluation -- known as the review appraisal and now ordered by most investors that buy home loans -- may not.

Bottom line: You may be able to nudge an appraisal a bit by showing there are better "comparable sales" available than the ones the appraiser used. In general, though, appraisers are much harder to influence. You may need to reopen negotiations with the seller or come up with a bigger down payment to make a deal work -- or pay down your mortgage in order to refinance.


3. You have too much debt.

Lenders look at how much of your income will go toward housing expenses (mortgage, property taxes and insurance) as well as how much you spend on other debt payments.


The total amount of your income that can be eaten up by these expenses can vary by the lender and even by the day. Over a matter of months, one major mortgage buyer dropped the ceiling of total debt from 65% to 55% and then to 50% of gross income, said Matt Hackett, the underwriting manager for New York lender Equity Now. Some have lower limits.


The mortgage industry still isn't as conservative about debt as it probably should be, said Michael Moskowitz, Equity Now's founder and president. Moskowitz noted that people can still get approved for loans that don't leave them enough breathing room for other costs, such as adequately maintaining the house or saving for other goals, including retirement.

Bottom line: If your projected housing-and-debt ratio exceeds 40% of your income, you should think twice about buying a home -- not because you won't get approved (you might) but simply because you're carrying too much debt. At the very least, you should pay off all credit cards and other toxic debt. Such debt indicates you're already living beyond your means, a situation that's likely to worsen if you buy a home.


4. You're self-employed and your income has declined.

To get a mortgage, you typically need to submit the past two years' tax returns. If your 2008 income was lower than your 2007 income and you're a W-2 wage earner, lenders will simply use the lower figure to decide how big a mortgage you can get.


The industry is far more leery of declining income if you're self-employed, Moskowitz said. Some lenders will use the 2008 figure, but others won't make the loan at all because they're worried your income will drop further and you'll default.

Bottom line: If you're self-employed and your income has dropped, talk to your mortgage professional about how that might affect your loan.

5. You recently started being paid on commission.


Companies eager to cut costs have been switching some of their staffs from salaries or hourly wages to commissions. That can wreak havoc with your mortgage application because lenders typically won't count commission income unless you've been earning commissions for at least two years.

Bottom line: If your company switched you to commissions before the end of 2008, you may have to wait to get a loan or use a spouse's income to qualify.


6. There's a problem with your tax returns.

Lenders don't accept your copies of your tax returns as the final word about what you earned. These days they order transcripts of the returns you filed with the Internal Revenue Service and compare those with what you had submitted.


Your loan will get tossed if you exaggerated your income, of course. But other problems include:
Unreimbursed employee expenses. This snares a surprising number of borrowers, Hackett said.

Any amount taxpayers deduct for these expenses has to be deducted from the income that can be used to qualify them for a loan. "We've had some loans that blew up because of this," Hackett said. "One guy had $49,900 of income but he wrote off $12,100 in (unreimbursed) auto expenses." Subtracting that amount from his pay left him too little income to qualify for the loan he wanted.


Second-home expenses. Even if you own the property free and clear, the taxes and insurance you pay on it will affect your debt ratio. Borrowers may not list the property on their initial application, especially if there's no mortgage involved, but the tax transcript will pick up any of the second-home costs they deducted.

A too-small payment for estimated taxes. If you're self-employed and pay estimated taxes, you might try to conserve cash by making a smaller-than-usual tax payment. That could be a mistake, since a lender might decide the smaller payment is a sign your income is declining.


It can take up to five weeks for a transcript to be available after a return is filed, Hackett said. So if you got an extension to file your return and didn't do so until the Oct. 15 extended deadline, your transcript won't be available for several more weeks, which could endanger your deal.

Bottom line: Review your tax returns with your mortgage lender or broker when you apply to see whether there are any red flags.

7. You can't get private mortgage insurance.


Technically, you still can get approved for a loan equal to up to 97% of a home's appraised value.

To do so, however, you'd need to get approved for private mortgage insurance. And PMI companies, severely burned by the real-estate flameout, are being pickier than ever before.


If you're the ideal borrower -- credit scores of 720 or above, with a debt load below 40% of your income and several months' worth of expenses in the bank -- you might get approved for private mortgage insurance that would allow you to borrow up to 95% of a home's purchase price in a flat or improving market, Hackett said.

In declining markets such as Florida, the best you could hope for is 90%, he said. And if anything is slightly wrong with your profile as a borrower, you probably will have to settle for less. If you can't come up with a bigger down payment, you likely will get funneled into a Federal Housing
Administration loan, which allows down payments as low as 3.5% but may have somewhat higher interest rates.

Bottom line: A bigger down payment gives you more options. Read "The end of the 0% down payment."


8. The lender doesn't like your condo association's finances.

Mortgage buyers are enforcing guidelines on condo and co-op purchases that used to be widely ignored, as well as imposing new restrictions.


Some that you might stumble into include:

The 10% ownership rule. If anyone owns more than 10% of the units in a building, you probably won't be able to get a loan. Lenders are worried that if this big owner defaults, the remaining owners won't be able to pay for proper maintenance. Yet 10%-plus ownership stakes are pretty common, particularly where apartments were converted to condos or co-ops and the original owner hung on to units to rent.


The fidelity bond. Associations are supposed to buy a bond to protect against theft by management company employees. Many skated along with small bonds, but now lenders want to see more coverage. "A lot of (associations) had $50,000, and now you might need $400,000," Hackett said. The actual cost of increasing the bond is usually just a few hundred dollars a year, but board members may not understand the importance of this requirement and resist coughing up the extra cash.

Cash reserves. Condo associations should generally have cash reserves equal to 60% of the association fees they collect over the year, to make sure they have sufficient reserves to pay for needed maintenance and repairs, RPM Mortgage's Lepre said. Many associations fall short of this mark. As above, owners who aren't actively trying to sell their properties may not realize the importance of this requirement and may resist efforts to boost reserves.


Bottom line: If you're buying a condo, talk to your mortgage pro about the unique requirements for these loans and make sure the association meets them before applying for a loan.9. Your lender is dragging its heels.

Like most other companies in this recession, lenders are often reluctant to hire workers, even if mortgage applications are piling up. If it takes too long to get your mortgage approved, however, you could wind up paying a higher interest rate (if your rate lock expires), or your purchase deal could fall through, particularly if the seller has another interested buyer.

Another issue: getting subordination for second mortgages. If you're refinancing and have a home equity loan or line of credit on your property, you essentially need to get your home equity lender's permission to complete the deal.

Bottom line: Ask your lender how long it will likely take for your deal to get done. If the wait time is too long, consider switching to a company that can offer faster approval. In any case, monitor your loan and follow up frequently with your mortgage professional and any home equity lender to make sure it stays on track.


10. You fail to stay on top of the paperwork.

By now, you should have a pretty good feel for how very much scrutiny your loan application is going to get. Lenders demand a ton of paperwork, and you should be prepared to prove anything and everything, especially your income and the source of your down payment.


Any missing document or oversight can delay or even torpedo your loan, which is why you need to respond instantly to your loan officer's requests.

Right before one loan was set to be approved, for example, Lepre got a notice that page 5 of the loan application hadn't been initialed.

"Before, nobody would have called about something like that," Lepre said. "I try to prepare people that they are going to be asked for stupid things, right up to the end."


Bottom line: Put your mortgage professional's number on speed dial and respond promptly to any document request, no matter how silly you think it is. Without every "i" dotted and "t" crossed, the loan might not get done.


Another great article Liz!

If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below. Thanks for reading!

Dan Tenchall

Great Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates

(586) 532-0600 dan@glmf.com

Great Advice On Credit Scores

One of the most important parts of my job is to help clients with their credit scores. With today's lending climate, good scores are a must. And your credit score is becoming a bigger part of your life everyday. From getting hired for a job, insurance quotes; the list is getting larger.

Here is an article from Liz Pulliam Weston of MSN Money that gives a great breakdown the highly misunderstood (and with good reason) world of credit scores


Five Ways to Kill Your Credit Scores
by Liz Pulliam Weston


One of the questions I'm asked most often about credit scores is exactly how much certain actions affect people's scores.

What good is a good credit score?Until now, the best I could do was say, "It depends." That's because the company that created the leading credit score, the FICO, has been wary about releasing specifics.

Fortunately, that just changed. At my request and for the first time, the company (also known as FICO) has released details about how specific actions, from maxing out a credit card to filing for bankruptcy, can affect people with different credit scores.

I asked the company to compute the results of those actions for two examples: a person with a 780 score, which is an excellent score on the 300-to-850 FICO scale, and someone with a 680 score. The results:

Effect on a 680 score Effect on a 780 score
Maxed-out card -25 to -45 -10 to -30

30-day late payment -90 to -110 -60 to -80

Debt settlement -105 to -125 -45 to -65

Foreclosure -140 to -160 -85 to -105

Bankruptcy -220 to -240 -130 to -150

Source: FICO

The results are given in a range because FICO is still a little nervous about revealing too much about its proprietary scoring. But the range is fairly tight, and we can clearly see the disparate impacts of the different actions

A guide, not a guarantee Before we go further, I have to make this clear: Your mileage may vary.

People with the same credit score can have very different credit profiles: more or fewer accounts, a different mix of accounts, a longer or shorter credit history, use of more or less of their available credit, etc.

Because of those differences, the same action -- maxing out a card, say -- can have different effects on people with the same score, depending on the details of their individual credit profiles.
For the sake of this exercise, FICO assumed both people had several active major credit cards as well as a mortgage, a car loan and student loans.

The person with the 780 score:
Has at least 10 credit accounts in total and a 15-year credit history.
Uses 15% to 25% of her credit card limits.
Has no late payments on her credit reports.
Has no collection accounts or other major negatives.

The person with the 680 score:
Has six credit accounts and an eight-year credit history.
Uses 40% to 50% of her credit card limits.
Was 90 days late on an account two years ago.
Was 30 days late on another account one year ago.

Here's what you need to know about each action and the effect it had:

Maxing out a credit card: Using 100% of your limit on any credit card puts you at risk of over-limit fees. It also takes a bite out of your credit score.
Our person with the 680 score might lose 10 to 30 points from this one action, while the 780 scorer could shed 25 to 45 points.

The difference points up an important fact: The higher your score, the more points you tend to lose from "bad" actions. That's because the scoring formula is sensitive to any sign you're getting in over your head. Maxing out a credit card is considered one of those signs.

You also should know that it typically doesn't matter to the formula if you carry a balance or pay off that maxed-out card as soon as you get your statement. What's usually reported to the credit bureaus is the balance on your last statement. Even if you pay the debt in full before the due date, the maxed-out card will hurt your score.

Skipping a payment: Mailing a payment a few days late normally won't hurt your score, although you may incur late fees and trigger higher interest rates. The big hurt comes when you miss a payment cycle entirely.

A 30-day-late report would shave 60 to 80 points from our lower-scoring person and 90 to 110 points from our higher scorer. In other words, one lapse of attention could plunge the 680-scorer into subprime credit territory, and our 780-scorer could find credit much harder to get and more expensive.

This is why it's so important to set up automatic payments to ensure your bills get paid on time, all the time. With credit cards, you can set up automatic payments that take the minimum payment out of your checking account to ward against a late payment. You can always make a second payment that reduces your debt or pays it off entirely. You can sign up for automatic payments on the Web site of your card issuer.

Settling a credit card debt: All the advertisements about "settling your debt for pennies on the dollar" make debt settlement sound like a great solution. But failing to pay what you owe a creditor will take a serious toll on your score.

Video: How to fix your FICO score

The 680 scorer would lose 45 to 65 points with this maneuver, while the 780 scorer would shed 105 to 125 points.

Our scenario assumed that our borrowers would miss one payment before settling the debt with their credit card companies. In reality, debt settlement negotiations can drag on much longer, with each missed payment taking another chunk out of your score.

Settling a debt with a collection agency would hurt less, probably much less, because the FICO formula is set up to weigh more heavily what the original creditor says about you than what a collection agency reports. But if our borrowers were settling with a collection agency instead, their scores would be lower to begin with, because they would have collection accounts on their records.

Also, you should know that the amount of debt your creditor "forgives" in a debt settlement solution is typically added to your taxable income. So you may save some money by settling a debt, but you'll give some of it back to Uncle Sam in higher taxes.

Losing a property to foreclosure: Foreclosure deals a severe blow to your credit score: 85 to 105 points for our person with the 680 score and 140 to 160 points for the one with the 780 score.

Foreclosures have implications for your future ability to get a mortgage as well. Although your score may start to improve as soon as the house is gone, mortgage lenders may not be willing to extend you another home loan until two to four years have elapsed.

In an attempt to protect their credit, many people attempt short sales, selling their houses for less than what's owed, with the lenders' permission. Unfortunately, these transactions, even if successful, are often reported as settlements. And a settlement, as you've seen, is pretty bad for credit scores. To lenders, a short sale isn’t quite as bad as a foreclosure, though, and it may be easier to get another mortgage once you’ve rebuilt your credit.

Filing for bankruptcy FICO spokesman Craig Watts once called bankruptcy the nuclear bomb of credit actions. Filing for bankruptcy would shave 130 to 150 points from the 680 score and 220 to 240 points from the 780 score.

This is different from the other black marks, where the higher scorer was still left with better numbers than the lower scorer. In this case, both would wind up near the bottom of the credit barrel. Getting new credit, particularly in the current credit-crunch environment, would be extremely tough.

Sometimes, of course, bankruptcy is the best of bad options. (See "Quiz: Should you file for bankruptcy?") But if you can't pay your bills, you should at least explore the other possibilities: forbearance, credit counseling or even debt settlement.

Finally, if you have any of these five black marks on your record, remember two things: The impact on your score may differ from what's shown above, and regardless of how many points you lost, you can rebuild your FICO score over time.

You can start by using a free FICO score estimator, such as this one at Bankrate.com, or MSN Money's credit score estimator, which similarly models a score on Experian's 330-to-830 range, to see where you stand.

Or you can sign up for free credit scores from sites such as Quizzle, Credit.com and Credit Karma, which use the actual information on file about you with the credit bureaus. But the scores you get still may not be the ones lenders actually see.

Or you can buy your Equifax or TransUnion FICO score from MyFICO.com. (Experian no longer sells FICO scores to consumers, although it continues to sell the scores to lenders.) With paid scores, you'll get specific advice about how to improve your numbers. In general, when you're trying to build a credit score, you should:

Pay your bills on time, all the time.
Reduce your credit utilization; below 30% is good, below 10% is better.
Have a mix of credit on your reports, including installment loans (mortgages, auto loans and personal loans) and revolving accounts (credit cards and lines of credit).
Refrain from closing accounts.
Apply for new credit sparingly.


Great article Liz!


If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below.Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates
(586) 532-0600

dan@glmf.com

Going Back In Time

I was sent this article from 2005. It is really interesting reading when you consider what the housing market was like back then and what it has become since then. It is amazing to listen what people were talking about back in the good old days.



The Mortgage Trap

By Dean Foust, with Peter Coy in New York, Sarah Lacy in San Mateo, Rishi Chhatwal in Atlanta, and bureau reportsBusinessWeek Online


Lenders are cranking out an ever-growing array of financing schemes and lowering standards to keep the housing boom going


Nicki Randolph, a San Francisco real estate agent, hasn't been scared off by talk of a housing bubble. Although she already owns both a home and a condo in Palm Springs, Calif., Randolph just closed on a third property -- dropping more than $1 million on a 1,400-square-foot loft in the heart of San Francisco. How does she juggle so many properties in the overheated California market? Lots of leverage, thanks to banks all too willing to provide ever more.

To finance her loft purchase, Randolph took out a mortgage that lets her pay only interest for the first five years -- a tactic that helps her ease into the hefty monthly payments. "Fears that the market is going to crash are way overstated," she says confidently. "It's a seven-mile-by-seven-mile city and a premier place people want to live. You have to be more aggressive here because the prices are so high."


PRESSURE KEEPS BUILDING.

Randolph's story is a familiar one -- and it shows the lengths to which buyers are willing to go to snatch up real estate as well as the extremes lenders will stretch to accommodate them. As prices continue to skyrocket in much of the country, banks and lenders are cranking out an ever-growing array of products ranging from no-money-down or interest-only mortgages, to special "Payment Power" loans that allow homeowners to defer monthly payments altogether twice a year.


Such creative financing is letting even marginal buyers purchase houses with price tags that used to appeal only to the rich and famous. In the process, banks and mortgage companies appear to be taking on more risk than ever before -- and if rates rise sharply or prices tumble, many of their customers could find themselves in deep trouble, too.

All those innovative mortgage products are a sure sign that lenders are doing everything they can to keep the housing boom going and to capitalize on yet another round of falling interest rates that no one expected. There are plenty of other signs of frenzy as well. Home appraisers complain that mortgage originators are demanding the optimistic appraisals needed to close on loans. "They started warning me to 'be a team player' and to 'hit the number' they needed to seal the deal," says Robert Burnitt, an appraiser in Midlothian, Tex.

SUPPORTING A STRETCH.

Enticed by juicy commissions from all those deals, others are jumping into the mortgage biz. Among them are John Switzer, an 18-year-old high school grad from New Bern, N.C., who put off college so he could start work as a mortgage rep for Houston-based Franklin Bank Corp. (NasdaqNM:FBTX - News). "Right now, mortgages are a little more interesting" than college studies, he says.


Yet nothing screams "frenzy" louder than the huge popularity of innovative -- and risky -- mortgage products that allow buyers to stretch for those million-dollar studios and multimillion-dollar suburban colonials. With interest-only mortgages now offered by everyone from ditech.com to Washington Mutual (NYSE:WM - News), such loans now account for 20% of all new mortgages, up from under 5% two years ago.

Option adjustable-rate mortgages, or "option ARMs," have also become all the rage in superheated markets such as California and Washington, D.C. With an option ARM, borrowers can choose among three different payment plans each month, continually changing what they fork over as their budgets shift. The options: a regular payment of both principal and interest, just the interest, or one that may not even cover the interest -- so the overall balance owed on the mortgage could continue to grow.


TREND TOWARD RISK.

The question is, will the proliferation of interest-only and option ARM mortgages leave many buyers strapped down the road, causing higher default rates? David Liu, a mortgage strategist for UBS in New York, notes that after similar products were introduced in the red-hot California market in the late 1980s, they ultimately incurred a default rate that was three times as high as conventional mortgages when the local economy went into recession in the early '90s.


Already there are signs that current option ARM borrowers are straining to make their monthly payment: Liu notes that among a bundle of mortgages originated by Washington Mutual and scrutinized into the secondary market last year, fully 60% of borrowers made only the minimum payment this past March. "That's definitely a sign that people are stretching,"says Liu.

There's plenty of other evidence suggesting that homebuyers and their lenders are climbing out on a limb. According to a survey of homebuyers released last November by the National Association of Realtors, 25% of those polled were able to get a mortgage with no money down, vs. 18% in early 2003 and virtually none in the late 1990s -- a trend that could leave many of these new homeowners under water if home prices take even a small dip.


"FROTH" SPILLS OVER.

At the same time, lenders are extending far more loans to borrowers who have had credit problems in the past. According to the Mortgage Bankers Assn., the share of new loans made to so-called subprime borrowers -- usually lower-income individuals with spotty credit histories -- rose to 28% in the second half of 2004, a sharp jump from the less than 5% of all lending that subprime represented back in 1994.


"I think there are going to be some blowups," says Bert Ely, a bank consultant based in Alexandria, Va. "These are people who are most vulnerable to job loss."

If the housing market swoons and homeowners get into trouble, the mortgage industry won't be far behind, many critics worry. "I'm very nervous about the risk of higher foreclosures down the road," says Stuart A. Feldstein, president of SMR Research Corp., a mortgage research firm in Hackettstown, N.J.


And on June 9, Federal Reserve Chairman Alan Greenspan revealed his unease when he warned Congress that "the apparent froth in housing markets may have spilled over into mortgage markets." He noted that the increasing use of interest-only and other "relatively exotic" mortgages are "of particular concern."

TOUTING SAFEGUARDS.

Lenders insist that worries about their standards are overblown. They maintain that, thanks to the advent of automated underwriting during the 1990s, their ability to analyze statistical trends in lending is far better than before, enabling them to better price loans according to risk.

"Underwriting is still more of an art than a science, but we're making it far more of a science," says Joe Anderson, a senior managing director at Countrywide Financial Corp. (NYSE:CFC - News), a Calabasas (Calif.) mortgage lender.


And lenders note that they've instituted more safeguards since the last housing boom in the 1980s, such as requiring that borrowers have several months of liquid assets to assure that they can keep paying their mortgages in the event of a job loss. "On a scale of 1 to 10 -- with 10 being the worst-case scenario -- my concern level is only around a 2 right now," says D.C. Aiken, senior vice-president for pricing and products at HomeBanc Mortgage Corp. (NYSE:HMB - News), a large lender in Atlanta.

Still, regulators are redoubling their efforts to make sure the banks are right. The Federal Reserve and other bank regulators recently ordered lenders making home-equity loans and lines of credit to do a more in-depth analysis of borrowers' income and debt levels and their ability to repay loans -- instead of relying heavily on credit scores, as many lenders have been doing. And regulators say they're busily drafting similar guidelines for mortgage lending as well.


DEPENDENT ON A ROSY SCRIPT.

State regulators are also starting to rein in hyper-aggressive lenders. In Illinois, legislators passed a bill that would give a state agency the power to review mortgage applications in lower-income areas to determine whether borrowers should be required to attend loan counseling -- paid for by the loan originator -- before receiving the loan. That, lawmakers figure, will discourage brokers from extending loans to high-risk borrowers who have a high probability of ending up in foreclosure.


Of course, Nicki Randolph and many more like her who have used lenders' aggressive mortgage offers to expand their fledgling real estate empires aren't normally thought of as high-risk borrowers. But if interest rates and housing prices don't follow the rosy script that Randolph and so many others are banking on, a whole lot of homeowners could be caught in a painful trap.



If only we knew then what we know now. I'm sure we still wouldn't have believed it.


If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below.

Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates

(586) 532-0600
dan@glmf.com

A Couple Of Points Of Interest

Hello Again!

It's great to be back. After a long absence due to technical troubles (gee, that never happens) and other general issues, it's great to be blogging again. I can only hope that all the issues have been taken care of and are now far behind.

Here we go:


First Time Homebuyers Tax Credit

The time is running out for this credit. If you or any one that you know is looking to buy a home soon, it's time to act right now! The tax credit in it's current form is scheduled to end November 30, 2009. All loans must be closed by that date to be eligible for the tax credit.

But, because of the anticipated rush of closings, lenders are going to be swamped with trying to close these loans before the deadline. This will cause an already slow process to be even slower. So don't get shut out, get the loan rolling today.

And I can't stress this enough, make sure you are even eligible for the tax credit in the first place. Talk to your tax accountant or go to www.irs.gov. for eligibility questions.

I've seen people close on loans and then find out they are not eligible for the tax credit.

Bummer!



FHA Streamline Refinances

Starting in November, FHA is going to change their guidelines regarding how they underwrite a FHA Streamline Refinance as far as credit scores, seasoning , loan amounts and appraisals. The FHA Streamline Refinance was a great tool to help a homeowner lower their mortgage payment with less paperwork and no appraisal. I can't tell you in this housing market how important it is not having to get an appraisal.

So if you are thinking about refinancing your current FHA mortgage, get it going today!


And just a side note, if you haven't seen the episode of "Family Guy" where there are multi-universes, you need to see it. Brilliant!

If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below. Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com

Are we back on?

For some unfortunate reason, this blog was knocked off line. However, we are back working again so look for more commentary from this blog site coming soon.

Thanks for waiting!

Where Has The Time Gone!

Has really been a month since I last wrote in this blog?

So much for my New Year's resolution! What happened? It's a combo excuse. Busy, busy and computer issues.

I know. This blog takes 20 minutes to write. And that's once a week.

But sometimes the combination of busy, busy and computer issues helps turn days behind into weeks behind and now the official One Month Behind.

Well it stops here. Let catch up and get back on schedule.

The mortgage process is getting slower and more complicated. Lenders are terribly backed up and there is no relief in sight. There is no such thing as a fast deal and everything needs to be closed at the end of the month when it's crazy busy. It seems that we are jumping through more and more hoops all the time to get deals closed.

However, mortgage rates are still on the low side. And if you are a first time buyer, you could be eligible for a tax credit up to $8000. There even was talk of being able to use the tax credit at the closing table (instead of waiting to get it on the next year's tax refund) where is really needed but HUD put that idea on hold for now.

There are also some good refinance programs out there that may give some homeowners some welcome relief on their monthly mortgage payment.

But most homeowners owe a lot more than the current value of their home, so help is limited. And with Detroit area reliant on the automobile industry, the prospect of economic recovery here is not very bright. The ripple effect of plant closing and layoffs probably will be felt for years to come.

So we dig in and wait it out.

What we are waiting for I'm not quite sure.

But I guess we don't have a choice.

We'll catch up more next time.

If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below. Thanks for reading!

Dan Tenchall
Great Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates
(586) 532-0600

dan@glmf.com

Mortgage Rates Remain Low

In an article from CNBC (http://www.cnbc.com//id/30248657), the topic is lower mortgage rates and how low can they go. The article describes how mortgage rates are over a percentage lower than they were this time last year.

And with these lower rates come with some very small shimmers of hope for the housing market. Home sales are a bit up as well as applications for refinances. This is all good news.

But then the "about face" happens.

As soon as someone is talking about the state of the economy and how there are "glimmers of hope", the speaker at the time has to recant and say something like "But we sill have a long way to go" or "the road is long and tough" or "we are still in a mess".

Listen to President Obama's speech from the other day. Every time he said something hopeful, he just about took it back in the very next sentence. It was like a conversational yo-yo.

We're doing good, but not real good. There is hope, but don't hold your breath. We see some good signs on the road to economic recovery, but the road is another 10,000 miles long.

I understand how as a good leader, the President is thinking. He wants to give the citizens hope but at the same time not mislead us into thinking that we are doing good.

I guess the only good thing is that now there is some positive news about the economy where as before it was all gloom & doom. I guess that is a step up.

I will believe we are recovering when the job numbers are better and home prices start to rise. People cannot buy anything without income. And people should be able to sell their homes with out taking a beating. Even if they just broke even and at least get back what they paid for the house, we would be doing a lot better.

Getting back to the CNBC article, how about this quote from Rick Sharga, Senior VP from Realty Track:

"Mortgage rates are at an all-time low but you have to almost be King Midas to qualify for the loan," "You need a nearly perfect credit score and job history and a significant downpayment to qualify," he said. "That wipes out a huge portion of the buying population."

Well that is not completely true, but he is on the right track. Lending guidelines have toughened for sure. But it is still a good time to buy or refinance with the rates being so low.

What is stopping most people from buying from buying a house or a getting refinanced is the appraised value of the house that they are currently living in. They either can't sell the house because they owe more than what they can sell the house for or they can't refinance because there isn't any lender who will touch them now that they owe more than the house will now appraise for.

Want a glimmer of hope?

Get home prices back up. And I think we would be on the fast road to recovery.

And I'm not going to counter what I just said.


If you have any comments on this article, I would love to hear what you have to say!

Feel free to comment below. Thanks for reading!

Dan TenchallGreat Lakes Mortgage Funding

For FREE Mortgage tips, Mortgage Calculators,must have articles and much more please visit my website!

Michigan Mortgage Rates
(586) 532-0600
dan@glmf.com