Category Archives: howmeowner help

Don’t Let Your Luck Run Out [INFOGRAPHIC]

Don’t Let Your Luck Run Out [INFOGRAPHIC] | MyKCM

Some Highlights:

  • The “Cost of Waiting to Buy” is defined as the additional funds it would take to buy a home if prices and interest rates were to increase over a period of time.
  • Freddie Mac predicts that interest rates will increase to 4.8% by this time next year, while home prices are predicted to appreciate by 4.8% according to CoreLogic.
  • Waiting until next year to buy could cost you thousands of dollars a year for the life of your mortgage!

The Truth About Housing Affordability

The Truth About Housing Affordability | MyKCM

From a purely economic perspective, this is one of the best times in American history to buy a home. Black Night Financial Services discusses this in their most recent Monthly Mortgage Monitor.

Here are two of the report’s revelations:

  1. The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
  2. Home affordability still remains favorable compared to long-term historic norms.

The report explains:

“Even though the value of the average home in the U.S. increased by about $13,500 over the last year, thanks to declining interest rates it actually costs almost exactly the same in principal and interest each month to purchase as it did this time last year.

Even taking into account the fact that affordability can vary – sometimes significantly – across the country based upon the different rates of home price appreciation we’re seeing, that’s a pretty incredible balancing act between interest rates and home prices at the national level…

Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms.”

However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.

“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”

Bottom Line

If you are ready and willing to purchase a home of your own, let’s get together to find out if you are able to. Now is a great time to jump in.

Obstacles to Homeownership: Perceived or Real?

Obstacles to Homeownership: Perceived or Real? | Keeping Current Matters

Yesterday, we discussed the belief Americans have in homeownership and their desire to partake in this piece of the American Dream. We also discussed some of the obstacles preventing them from attaining that goal. However, studies have shown that many of the obstacles mentioned are perceived, not real.

A recent study by Fannie Mae, What Do Consumers Know About The Mortgage Qualification Criteria?, revealed that many consumers are either unsure or misinformed regarding the minimum requirements necessary to obtain a mortgage. Let’s break down three such challenges.

Down Payment

Perceptions

Many renters have mentioned that the lack of an adequate down payment is preventing them from moving forward with the purchase of a home. According to the Fannie Maereport:

  • 40% of all renters don’t know what down payment is required
  • 15% think you need at least 20% down
  • An additional 4% think you need at least 10% down

The Reality

There are programs offered by Fannie Mae, Freddie Mac and FHA that require as little as 3-3.5% down. VA and USDA loans offer 0% down programs. According to theNational Association of Realtors, the typical down payment for a first time buyer is 6%.

Credit Score

Perceptions

Many renters have mentioned that the lack of an adequate credit score is preventing them from moving forward with the purchase of a home. According to the Fannie Maereport:

  • 54% of all renters don’t know what credit score is required
  • 5% think you need at least a 740 credit score

The Reality

Many mortgages are granted to purchasers with a credit score of less than 700. According to Ellie Mae, the average credit score on a closed FHA purchase is 687 and the average credit score on all loans is 722.

Back End Debt-to-Income Ratio (DTI)

Perceptions

Many renters have mentioned that they carry too much debt which is preventing them from moving forward with the purchase of a home. According to the Fannie Mae report:

  • 59% of all renters don’t know what DTI is acceptable
  • 25% think you need at under 25%
  • 7% think you need under 39%

The Reality

Lenders like to see a back-end ratio that does not exceed 36%. Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% based on credit score and other requirements.

Bottom Line

Don’t let a lack of knowledge or misinformation keep your family from buying a home this year. Meet with a local real estate professional who can evaluate your ability to buy now!

Home sales in a lull, median sales price stalls, inventory hovers over 3,400

OCTOBER  2014 RESIDENTIAL SALES STATISTICS

Sales volume decreased for the third straight month, closing with 1,375 single family home sales. This is down 1.5% from the 1,396 homes sold last month. Month‐to‐month since July, sales have decreased 1,548 – 1,428 – 1,396 – 1,375, respectively. Compared with last year, the current figure is down .8% (1,386 sales). Making up this month’s total are 1,208 Equity Sales (87.9%), 83 Short Sales (6%) and 84 REO sales (6.1%). For the month, REO sales remained the same, short sales increased 17.6% and conventional sales decreased 1.1%.

Of the 1,375 sales this month, 256 used cash financing, 654 used conventional (mortgage‐backed) financing, 312 used FHA (Federal Housing Administration), 89 used VA (Veteran’s Affairs) and 64 used Other* types of financing. The average DOM (days on market) for homes sold this month was 37, while the Median DOM was 23. These numbers represent the days between the initial listing of the home as “active” and the day it goes “pending.” Breaking down the Days On Market, there were 816 listings that sold between 1 – 30 days, 293 listings that sold between 31 – 60 days, 148 between 61 – 90 days, 69 between 91 – 120 days and 49 sold after being on the market for over 120 days. This breakdown, as well as types of financing, is show in the graphic below.

October 2014 Housing Stat

The month‐to‐month median sales price decreased 1.1% from $275,000 to $272,000. The current level is 7.3% above the $253,500 median sales price of October 2013. The current figure is up 70% from the January 2012 low of $160,000. When compared to the all‐time high ($392,750/Aug. ’08), the current figure is down 30.1%.

Active Listing Inventory in Sacramento County decreased 2.7% for the month to 3,434 listings, down from the 3,529 listings of September. Year‐to‐year, the current number is up (29.1%) from the 2,659 units of October 2013. The months of inventory remained the same at 2.5 months.

FHAs Back to Work Program Waives Waiting Times

(Courtesy NKS Financial)

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Purchase again sooner than you think

The Federal Housing Administration (FHA) recently announced its “Back to Work” program, which is giving individuals who suffered a long period of hardship during the recent housing crisis a second chance to prove they can carry a mortgage and own a home.

The program will waive many of the waiting periods associated with a significant “economic event” such as bankruptcy (Chapters 7 and 13), short sale or foreclosure.

Potential candidates may be first-time or repeat home buyers, and the program can be used for the 203K rehab loan. It must be approved by an FHA lender, and as some lenders are choosing not to participate, you may want to contact your mortgage professional for more information on this.

Eligibility

To participate in the program, individuals must be able to demonstrate they’ve recovered fully from the “event”, and document the fact that they did have a household income loss of at least 20 percent for a period of at least six months that coincided with the “event.” They also need to prove current, stable and documentable employment to qualify.

As well, they need to demonstrate a 12-month positive payment history, and this specifies on-time payment of all mortgage and installment debt. There is some latitude for credit card debt, but it is slight.

Counseling sessions

Applicants also must attend counseling sessions before being able to participate in the program. This is usually a one-hour session with a HUD-approved counselor, and was designed to help participants prevent the “economic event” from happening again.

Check Your Mail – Payments to 4.2 Million “Distressed” Borrowers Happening Now

Actual check received in the amount of $2000 by one of my past clients in her mail today; she had completed a short sale. Envelope reads "Important Payment Agreement Informaton Enclosed" from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System
Actual check received today by one of my past clients who completed a short sale. Envelope reads “Important Payment Agreement Informaton Enclosed” from the Office of the Compftroller of the Currency and the Board of Governors of the Federal Reserve System
If you have been foreclosed on or have completed a short sale, don’t be so quick to throw away mail from your past lender. Payments to 4.2 million borrowers will be distributed to those whose homes were in any stage of the foreclosure process in 2009 or 2010 and whose mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

In most cases, eligible borrowers will receive a letter with an enclosed check sent by the Paying Agent–Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments. Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement. Information provided to Rust will only be used for purposes related to the agreement.

Watch out for scams. Beware of anyone who asks you to call a different phone number than the number above or to pay a fee to receive a payment under the agreement.

SO WHAT’S THIS ALL ABOUT
The Federal Reserve Board issued enforcement actions against four large mortgage servicers
–GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation–in April 2011. Under those actions, the four servicers were required to retain independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The review was intended to determine if borrowers suffered financial harm directly resulting from errors, misrepresentations, or other deficiencies that may have occurred during the foreclosure process.

A number of servicers supervised by the Office of the Comptroller of the Currency (OCC) were also required to conduct independent reviews.

The deadline to request an independent review was December 31, 2012.

I Don’t Need An Agent, I Can Do This On My Own and Save Some Money

Elk Grove Real Estate Short Sale Agent – How to Really Save Money

It’s the age old adage, “they just want your money”. And so, time and time again, many people spend countless hours plotting and scheming to try to avoid calling a professional to handle whatever ails them in an effort to save some money. But more often than not, whether it’s the plumber, mechanic, or real estate agent, the sad irony is, eventually the call will need to be made.

Here is the reality, you can’t do it all. And you should not have a problem throwing some money at someone who can do it for you — and do it well.

Are there dishonest people out there who have no intention of providing you great service or have no desire to help you fix your problem? The answer is a resounding yes. However, there are also a number of honest professionals with great integrity who are gifted at what they do and earnestly desire to help provide a solution to your problem.

As it pertains to real estate, adding insult to injury, I have seen, and been a party to, agents who minimize their services and reduce their commission or value just to get a deal done or a listing in hand.

However, any real estate agent worth their weight will, again, have their full fee thrown at them in an instant if they are providing the client with what they deserve — efficiency, great communication, good customer service, and a deep understanding and knowledge of what needs to occur in the transaction. If an agent is all those things, as my grandma used to say “baby, you can write your own ticket”.

Case in point, I recently was involved in a transaction where the seller, before she hired me, tried for years to sell the home on her own because she wanted to “save some money”. In the process of saving some money, she intentionally neglected to pay the property taxes so that she was not paying out more money on the property than the other owners who would also get a piece of the pie when the home sold. However, she failed to consider the penalties and interest that would continue to accrue over the years. In addition, now the county was ready to foreclose on her home due to unpaid property taxes. How’s that for saving some money?

There was no magic bullet when I listed the home and it sold in a matter of days to a cash buyer thousands above list price. The market is hot, and I’m diligent…that’s the magic.

Here’s another example of “savings”:

A Seller’s Internet Inquiry (Q): My husband and I have been purchasing a house from private seller (lease to buy) and it is coming very close to the end of the contract what is involved in transferring the property to our daughters name. Are there taxes or county fees we must pay?

My Response (A): I won’t wallow in what you should have done. The details of your transaction really don’t matter at this point.

Truth is, I cannot advise you. As a REALTOR, I abide by the State of CA DRE laws and regs and am bound contractually to the terms and conditions which were created and ascribed according to the California Association of REALTORs and can be backed up by a slew of real estate attorneys on their payroll. If you had a question which fell under any of those terms, a REALTOR could advise you all day. And as an extra bonus, we would also have the legal power behind us to back you up.

When people opt to go outside of a traditional real estate transaction, ungoverned and unpoliced, they are taking a risk.

Your lease to buy agreement, if you have questions, should probably be reviewed with a real estate attorney, a title company, and a full-time real estate agent. It may not be too late to get the right entities involved.

It’s not worth it in the long run to try to save a little money. If you end up in court, you’ll end up paying way more than you tried to save.”

That’s really all there is to it. You don’t have to try to be captain-save-a-dollar when your real goal should be to have it done right. Let someone help you who knows what they are doing so that you can really save some money.

Hope that helps.

Foreclosure: What It Really Means & How To Avoid It

Foreclosure: What It Really Means & How To Avoid It.

Homeowner Affordability and Stability Plan – Q&A

Borrowers Who Are at Risk of Foreclosure Are Asking:

What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?

The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage.

Do I need to be behind on my mortgage payments to be eligible for a modification?

No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level.

How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?

In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009.

I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence.

I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?

Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence.

I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?

Only the first mortgage is eligible for a modification.

I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?

The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal.

I heard the government was providing a financial incentive to borrowers. Is that true?

Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period.

How much will a modification cost me?

There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance.

Is my lender required to modify my loan?

No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate.

I’m already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?

Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.

How do I apply for a modification under the Homeowner Affordability and Stability Plan?

You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program.

What should I do in the meantime?

You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes

– information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources
– your most recent income tax return
– information about any second mortgage on the house
– payments on each of your credit cards if you are carrying balances from month to month, and
– payments on other loans such as student loans and car loans.

My loan is scheduled for foreclosure soon. What should I do?

Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower’s eligibility. We support this effort.

Borrowers Who Are Current on Their Mortgage Are Asking:

What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?

Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities.

I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance.

How do I know if I am eligible?

Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac.

I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?

As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage.

Will refinancing lower my payments?

The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a “Good Faith Estimate” that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

What are the interest rate and other terms of this refinance offer?

The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes.

Will refinancing reduce the amount that I owe on my loan?

No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan.

How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009.

When can I apply?

Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009.

What should I do in the meantime?

You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:

– information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources
– your most recent income tax return
– information about any second mortgage on the house
– payments on each of your credit cards if you are carrying balances from month to month, and
– payments on other loans such as student loans and car loans.