Steve Lupton sent this email to our office on Friday:

Beginning June 1st most lenders in New Jersey will be ordering a second full credit screening just prior to closing. This last minute screening is designed to determine whether you’ve incurred any additional debt between the date of your loan application and loan closing. If additional debt, or even application for new debt, is discovered you may experience a delay, or a hold on your loan closing. We’re talking about debt of any kind, a new credit card, line of credit, appliances, furnishings, TV’s, automobiles etc. For many borrowers it’s difficult to fight the urge to shop for all the things needed for the new home. You go to Best Buy or Home Depot and it’s difficult to pass up 0.00% financing with 2 years of deferred payments. If you take on new debt large enough to exceed the original debt to income ratio, or there are recent inquiries in to your credit, your deal could unravel just before the finish line.

Fannie Mae spokeswoman Janis Smith said lenders “will have to look for things like new credit accounts, increased credit lines, increased balances on existing accounts, undisclosed or newly recorded liens, second mortgages — anything that may have changed since initial application that might impact a borrower’s debt-to-income ratio.” Home buyers and refinance borrowers need to resist any additional credit of any kind prior to the closing of their loans.

If you’re purchasing a home or refinancing, it’s crucial that you be aware of these new rules and proceed accordingly. If in doubt contact your lender about any additional credit you’re considering and make sure you’re given the green light.

Compliments of Rich Hirsch of Mortgage Master Inc Phone: 908-410-9066 rhirsch@mortgagemasterinc.com Feel free to contact Rich directly with any questions.

1. Effective April 5, 2010, the up front Mortgage insurance premium (MIP) will be increased by 50 bps to 2.25% (from the current level of 1.75%.)

2. FHA plans to request legislative authority to increase the maximum annual MIP.
If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing.

3. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.

4. Reduce allowable seller concessions from 6% to 3%.
This change will bring FHA into conformity with industry standards on seller concessions. and will minimize incentives to inflate appraised value.

 
I personally think this is great. Appraisals will no longer be such an issue from large seller concessions,  and if a borrower’s FICO score requires them to put 10% down, that is actually protection for the buyer if the market drops further or even if the market stays flat and the buyer needs to sell within a year or two.  Your thoughts?

If you’re eligible for this $8,000 tax credit, please keep in mind that you need to be under contract for your new home realistically by October 15th. Feel free to call us for details. (973)464-9129

Yours to count on,

The Sue Adler Teaam

What is the HVCC?

The HVCC is the Home Valuation Code of Conduct. The HVCC is the result of a joint agreement between Freddie Mac, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General. The agreement was formed in an effort to enhance the independence and accuracy of the appraisal process. Unfortunately, that has not been the case. This past year, the HVCC has quietly transitioned from a mere proposal into concrete national policy which has altered the core aspects of real estate appraisals.

As a result of the HVCC, many appraisals are now being outsourced to 3rd parties, many of whom do not have a working knowledge of the geographical areas they are appraising. As a result, buyers are being subjected to higher appraisal costs, inaccurate valuations, and the elimination of the longstanding benefits of one-on-one business relationships with local Realtors, mortgage originators, and appraisers. Because of the formation of the HVCC, local market value decisions have now been shifted to unfettered and often uninformed appraisal management companies located hundreds, if not thousands of miles away.

It’s likely that local real estate transactions are being derailed by so-called appraisal reviewers, hourly workers who have absolutely no working knowledge of the community where the appraised home is located. This practice hurts home buyers, sellers, Realtors, and mortgage originators.

The Good News

Although many banks are now outsourcing appraisals to management companies as part of the HVCC, regulations do allow mortgage lenders such as Mortgage Master to use their own in-house, approved appraisers to perform home appraisals with the following caveat:

“Lenders may use in-house appraisers, provided they are completely independent of the sales staff and their compensation does not depend on their estimates or on loan closings.”

Bottom Line

It is extremely important for homebuyers to determine whether potential lenders use an appraisal management company or have in-house appraisers. This choice can mean the difference between a loan closing and a loan unraveling.

Rich Hirsch

Mortgage Master Inc.

Phone: 908-410-9066

eFax: 908-325-0018

rhirsch@mortgagemasterinc.com

Interested in purchasing a home in New Jersey, but have not sold your existing property? 

I’m not an advocate of buying before selling in today’s market unless you understand and are comfortable with the risks involved, but if you insist on going this route, according to Rich Hirsh, from Mortgage Masters, here are Fannie’s guidelines:

If you are applying for a conventional loan, Fannie Mae requires that you either have 30 percent equity in your CURRENT residence OR 6 months cash reserves for BOTH homes. 

  Home Buying Scenarios

     #1 – Current Home is SOLD but not CLOSED prior to purchasing other one.

o   Must qualify for BOTH house payments and have 6 months worth of payment reserves for BOTH homes

 UNLESS

o   There is an executed purchase contract and all finance contingencies have been cleared on the home you are selling

    OR

o   Have 30 percent equity in current residence (Appraisal/BPO) PLUS 2 months worth of payment reserves for both homes

     #2 – Existing Home Converts to Second-Home Status

o   Must qualify for BOTH house payments

AND

o   Have 6 months worth of payment for BOTH homes

 OR

o   Have 30 percent equity in home being converted to 2^nd home

(Appraisal /BPO) PLUS 2 months worth of payment reserves on BOTH homes.

     #3 – Existing Home converts to Rental Property

o   Must qualify for both house payments AND have 6 months cash reserves for BOTH homes

UNLESS

o   Rental income can be used to offset monthly payment ONLY if home being converted to rental has 30% equity (Appraisal /BPO) AND home is leased AND security deposit has been verified.

The bottom line:  If you are buying a home without selling your current home, there will always need to be cash reserves after closing in the amount of 6 months PITI unless there is 30 percent equity in their current home.  Then you will need 2 months reserves! 

Rich Hirsch Mortgage Master Inc. Phone: 908-410-9066  eFax: 908-325-0018 rhirsch@mortgagemasterinc.com

Bryon Ellington and Jay Papasan give a great overview of the current real estate market and are right on as far as their advice to buyers and sellers.  The rates are even lower at this moment ( Feb 16th) than when this video was done- today they are 4.75% 

To find out about each micro market, visit www.sueadler.com and check out the home sale stats pages for each of our midtown direct trainline towns. Or,  just call me! (973)464-9129

Yours to count on,

Sue

Dear Fellow REALTOR®,

Here’s our take on the Stimulis Bill and Treasury announcements made this week. We look at the Stimulis package AND the Treasury’s package holistically, in compliment with each other – mostly because that’s how the Obama team is looking at it. Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem.

So here’s what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES’s thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

In addition, we preserved what we have – which some tend to forget is always on the table when these negotiations start up again – mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).

We did make a run at the $15,000 credit — and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of ‘what we are willing to give up to get a $15,000 tax credit’ and kept the debate again, on how much it should be. It’s pretty hard to complain when they give you what you ask for and you lose something you never had.

While we study the Treasury specifics on their major role in providing the rest of the housing solution — there is much more to come and we are working diligently with the Administration to help ‘unclog the pipeline’ and get capital flowing into housing again.

Sincerely,

Charles McMillan, CIPS, GRI
2009 NAR President ]]> http://njexperts.com/2009/02/14/housing-and-the-obama-stimulus-package-status-report-from-the-national-association-of-realtors-nar/feed/ 0 http://njexperts.com/2009/01/05/important-clarification-regarding-down-payments-for-your-home-purchase/ http://njexperts.com/2009/01/05/important-clarification-regarding-down-payments-for-your-home-purchase/#comments Mon, 05 Jan 2009 18:43:59 +0000 Sue Adler http://njexperts.com/?p=294 The following is a re- post from the Realtor.org website:

Media Advisory: Downpayment Clarification
Washington, December 31, 2008

There is some misinformation in the media lately about the required size of a down payment for a mortgage in today’s market, and the blog world is abuzz with misperceptions. Not all so-called experts are knowledgeable in this area, and some experts are being misunderstood.

The facts:

An individual may be required to put down 20 percent based on that person’s financial situation. But that is not an across-the-board requirement for all borrowers.

A borrower who puts down less than 20 percent is required to obtain mortgage insurance.

Even in a declining market, a borrower is required to make at least a 5 or 10 percent down payment.

FHA requires a 3.5 percent down payment by borrowers, so long as they meet a 31 percent housing cost-to-income ratio. In other words, anyone who stays within their budget and who can afford a 3.5 percent down payment (even with family help) can become a homeowner.

For your own individual situation, just give me a call and i can help you navigate through this process.

Yours to count on,

Sue Adler  (www.SueAdler.com) 973-464-9129

My advice is to avoid the aspirin, do not make assumptions, do NOT read the dramatic press.

Interest rates are the lowest they’ve been in 3 years and true opportunities exist, so make sure you communicate your specific circumstances to your mortgage broker early in the process. There has never been a better opportunity for buying a home.
A few recent changes to be aware of in order to manage your expectations:

• Several banks now realize that they were overly enthusiastic about approving credit lines. As these banks try to reduce their risk exposure, some homeowners are getting notifications that their line of credit has been reduced or even cancelled. Banks are concerned about what your home is worth and about your ability to verify your income, credit and assets.
• Investors are very concerned about the future of certain industries and the future of the continuance of Bonus and Commission income. In the past, such income was averaged for 2 years for qualifications; don’t assume the same is true today. Best to get this checked out BEFORE starting your home search.

• Buyers no longer have the option to have two mortgages at closing (i.e. 80/10/10 loan) to avoid paying Private Mortgage Insurance (PMI) or avoiding a certain loan amount for lower rates. For mortgages of $500,000 or less (depending on the investor) and less than 20% down payment, guidelines now require PMI. Your mortgage application now needs approval by the Lender and the PMI provider.

• Mortgages greater than $500,000, with most Lenders, now require at least a 20% down payment.

• Bridge loans are most likely not an option today, except in rare instances. Investors are not allowing most borrowers to close on their new purchase without closing on the sale of their current home. This means either you get a larger mortgage if you have the down payment in the bank, or plan to close on the sale of your current home the same day as the purchase of your new property. Either way, you should sell your current home before purchasing another one. It makes you a stronger buyer in the seller’s eyes too.
Renting your current home without selling it and buying another primary property is scrutinized unless you have at least 30% equity in the home you will lease.
• For refinancing, you need to have at least 20% equity today based on today’s bank appraisal. There are now 40 year mortgages and Interest-Only payment loans, which could assist with lowering your monthly payments. Your lender can help you with your options. Keep in mind, the presence of a second mortgage or line of credit (and today’s bank appraisal of your home) could impact or limit your options.
NOW FOR THE GOOD NEWS & WORDS OF ENCOURAGEMENT….

There are many worthy borrowers and there are mortgage funds available today at very low interest rates (30 year fixed today at 5.5%)! There are guideline changes but they may or may not impact you directly! Don’t assume or let the press intimidate you — you could be a very worthy borrower who is in position to take advantage of this (housing) market and interest rates!
Sue and her team sold 7 houses in November, and financing was not an issue.
Drew McKenzie is a Senior Mortgage Consultant with Real Estate Mortgage Network with 16 years of lending experience. Please contact Drew with your questions or comments. He is licensed everywhere in the country to provide mortgage financing.
Phone: 973.271.8025
E-mail: dmckenzie@remn.com
http://www.drewmckenzie.remn.com/

Trying to make sense out of mortgage guidelines today can make your head hurt.