Twin Cities Real Estate News Let's talk about the Twin Cities Real Estate Market. I will post helpful links and answer questions about real estate or mortgages. I live and work in Minnesota, so some of my ideas may focus specifically on Minnesota real estate or mortgage regulations applicable to our state.
First time buyers often have little to no credit depth, lower credit scores and a limited amount of resources for the down payment and closing costs. FHA mortgages addresses each one these issues. Let’s start with credit depth. Often a first time buyer is younger and hasn’t had the time to establish the traditional trade lines that an older borrower may have such as repayment history of student loans, car payments, and credit cards. FHA underwriting guidelines allow for what we term “non traditional credit” to be used. Non traditional credit is where a person is obligated for repayment, but the repayment history isn’t necessarily reported on the credit report. Examples include rental payments to a landlord, cellular phone bills, utility bills like gas/electric and cable TV bills.
Credit scores are always important and used in underwriting loans. FHA allows for scores as low as 580. In certain circumstances, they may even go below this number with a file that warrants an exception if the file is manually underwritten. Today we are finding most conventional mortgage guidelines are requiring a 620 credit score or higher. FHA is moving towards risk based pricing. This means lower credit scores will have to pay a higher mortgage rate but the tradeoff is homeownership will still be possible. Another HUGE advantage of FHA is that they allow for a non occupying co-borrower to go on the loan and qualify with the borrower. Together, all borrowers become one for underwriting purposes. This means we take the income and credit of the co-borrower and combine it with that of the owner occupant borrower. We always default to the lower of the combined credit scores for underwriting. Imagine the possibilities of a self employed or non employed borrower combined with a much stronger co-borrower with a strong income.
Lastly, let’s address money for the down payment and closing costs. Currently, FHA 203B loans require borrowers to put 3% of their funds into the transaction. The minimum down payment is 2.25% and the other .75 percent would be for a contribution towards closing costs or escrows for the total of 3%. Here’s the good part-the 3% can be a gift from a relative or a qualified charity. Many of the down payment assistance providers (DPA) such as Nehemiah and Genesis are able to make the down payment a reality. The underwriting provisions regarding charity down payment providers are changing. I suggest you act quickly if you intend to explore that option.
Just this afternoon, I got a transaction accepted for a buyer using the Nehemiah gift program. It is really simple. My buyer would not have been able to buy the home if we didn't use this program.The website to learn more about Nehemiah is www.getdownpayment.com Another popular gift funds provider is Ameridream at www.Ameridream.com and another is Genesis at www.thegenesisprogram.org/buyers.cfm . There are others too-check with your preferred lender and see who is on their approved list of down payment assistance providers. We provide loans in Minnesota as a MN mortgage broker and use many different mortgage loan programs- www.ventureloanapp.com
Computer literacy is key to connecting with the first time buyers-they are younger and use the computer. Are you reaching them through your efforts? How this Minnesota Realtor had an Epiphany!
Approximately 18 months ago I sold 7 condominiums to various Twin Cities investors. We collectively agreed to share the responsibilities for showing the properties as well as splitting the costs for 7 weeks. Each investor client was assigned a designated week and duty for marketing. When advertising for prospective tenants, we did the following: classified ads in the Star Tribune, classified ads in the Pioneer Press, Classified ads in the Minnesota Daily, posted flyers at all available spots at the U of M, St Thomas, St Cathrine's and Augsburg, posted at the coffee shops bulletin boards, and posted an online ad at Craig's List.
Guess where all but one of the tenants were found? Craig's list. The one tenant that came from the Star Tribune was found by the tenants parents-they were searching for places for him as he was out of town relocating back to Minnesota after college. They still read the paper because they are of that generation. I confess, I am also of that generation and but I now forgo the local paper. Since college, I've read the Wall street Journal. I do so daily and wouldn't miss it. It goes extremely well with a hot cup of coffee and my cereal in the AM. BUT, I also get my daily news from sources such as Drudge Report and Breitbart.
From this rental experience, I became aware that I needed to learn the computer better. While I wasn't incompetent, I can always improve. I enrolled in the E-Pro course that Fall. If you are a Realtor and plan on staying a Realtor, you NEED to take this course. I'm not kidding. You will learn a ton. Also, one of your assignments will be to set up your blog at RealTown. I initially let blog remain semi dormant, then I started to get into it. My advice is just start. Did you know that Yahoo loves RealTown? Prove it to yourself-write a local blog post and check for the title key words. You will be in the top 20 almost for sure. From my own observation, it appears that Google likes Activerain and will index them more often than RealTown, but they still index RealTown too. I could be wrong, but that's what I think I've noticed. Anyway, the point is you need to hone your computer skills and you need to become an E-Pro.
Another resource that I've found that you might like comes at it from an internet marketing angle. Sometimes learning a topic from another angle will give you an edge in your business-such as real estate sales. There is a guy named Eric Holmlund at http://www.ericstips.com/ He has great little 15 minute video. I think his subscriber list is about 33K people. I think he's refreshing because he provide a lot of value and isn't trying to sell you something every five seconds. That isn't to say he won't have something to sell you in the future. From his most recent blog post and video, he offered these online learning resources for the basics:
Many of us have met with prospective buyers and people who are having financial difficulty. In today's stressed economic environment you don't have to look too far. Besides the obvious reasons, sometimes "life just happens." In times like these, you might want to collect information that could be useful to help people rebuild their lives and credit. Besides doing a public service, you might be building your future pipeline of business. We are our brothers keeper.
From a business perspective, who is going to be buying homes in the next 3-5 years? It is all the people who have just lost their existing home to foreclosure. Many want to be homeowners again. If you establish relationships and are helpful today, when they are creditworthy they will remember who helped them in their darkest hour.
Like a farmer, you need to plant your seeds before you can harvest your crop. I can guarantee you won't have much competition.
I have two resources that are E-books that I provide-You are welcome to click on the link and download a copy for yourself or anyone who can benefit from the information. Here are the links to the books and the outline of the content
•Define a credit score, a credit report, and other key financial terms
•Develop a personalized credit repair plan that addresses your unique financial situation
•Find the resources and people who can help you repair your credit score
•Repair your credit effectively using the very techniques used by credit repair experts
Plus, unlike many other books on the subject, this ebook will show you how to deal with your everyday life while repairing your credit. Your credit repair does not happen in a vacuum.
* Why an e-book or how-to guide on setting up a family budget?
* Why would or do you need a family budget?
* The business case for and rationale behind family budgeting
* Benefits and advantages of a family budget
Family Budgets Defined
* What is a family budget?
* What constitutes a good family budget?
* What should it contain and look like?
The Family Budget Process
* How to set up a family budget?
* Some practical suggestions and a step-by-step summary of a family budget process
* Hints, tips, tricks and tools for setting up a family budget
* How should a family budget be used?
You must educate yourself about mortgage financing options!!
FHA loans are available to individuals currently in a chapter 13 bankruptcy-this applies to purchases or refinancing. You have to have made the past 12 months of payments on time. This is unlike conventional loan products which require a minimum waiting period from the bankruptcy discharge date. How many borrowers have you met that either are in a chapter 13 BK or have just recently had one discharged? How many borrowers have been told buy their loan officer that they had to wait or accumulate more of a down payment before they could buy a home?
If you want to sell more homes, you need to know and learn about the financing. Don't rely on what on what one mortgage company may tell you. Many banks and mortgage brokers do not finance with FHA loans. The approval requirements are higher and not everyone can or wants to go through the process. As such, you may never hear about the FHA options. You need to at least explore FHA-the down payment requirement is only 2.25% on a purchase. Total buyer contributions must be 3%. BUT, the contributions can be from a gift-of which there are down payment assistance programs available that can provide the gift. I could write a book about all the cool things FHA can do. Go to hud.gov to learn more.
I have been selling homes in MInnesota since 1986-http://www.selling.mn and a Minnesota broker associate since 1988. I have been financing homes as a Minnesota mortgage broker since 1995-http://www.ventureloanapp.com I am able to structure transactions with the maximum number of options for the borrower and seller. Too often, buyers don't know what is available. The housing crisis can be resolved quicker with better eposure to the complete set of mortgage loan financing options.
Make sure whomever you select to provide the financing that they are experienced and knowledgable about loan product choices.
For one year ONLY-FHA Rules regarding the 90 day waiting period hae been lifted!
Problem: FHA wouldn't finance a home if it had been bought and sold withing 90 days. This discouraged rehabbers from buying into areas that might have been more conducive to FHA mortgage financing. Areas that would have been prime candidates for rehab were sometimes neglected. Property inventory would increase as investors chose to move to other areas or waited out the 90 days. During this waiting period the properties and areas could fall into dis-repair. REO properties are now more appealing to investors.
Solution: Using conventional financing was the solution in the PAST. Since March of 2008, with the new rules in conventional financing and declining market limitations FHA is becoming that loan of choice. Remember that FHA allow for lower down payment-2.25% and FHA loans allow for Down Payment Assistance from a qualified DPA provider. The low down payment and opportunity to use qualified gift funds makes mortgage financing possible for many people-first time buyers and otherwise.
Net result: Lenders and investors are now incentivized to rehab property quickly. This should stabilize neighborhoods as FHA financing will now be an option for buyers!
Visit http://www.selling.mn to begin to search for next home in Minnesota. Mortgage broker-Venture Development provides more information about FHA and an FHA video information- http://www.ventureloanapp.com
MGIC-one of the nation's leading underwriters and providers of private mortgage insurance has recently created a FREE online resource for consumers. What they've done is create two online classes that will provide buyer education for first time home buyers and budding landlords. You can login and take the class at your leisure. Once you complete the class and you pass a short test, you will receive a certificate of completion. This MAY be able to be used for mortgage programs that require buyer education prior to closing your home. For example, many of the grant and bond programs provided by various agencies have home buyer education as a condition of getting the loan.
Did I mention the cost?-It's free! This is what you need to do: go to http://www.MGIChome.com and look at the class. You can start it immediately. When you are ready to take the test, you will need the lender email login. Feel free to use ours-it is: learning@ventureloanapp.com
Here is a brief synopsis of the class that I've taken from the MGIC site:
So you’ve decided to make the leap and become a homeowner. Congratulations! You’ve come to the right place to prepare yourself for what lies ahead, to ensure that you go into the home-buying process with your eyes wide open.
As you complete each chapter, come back to the Landlord Education home page to review the Becoming a Landlord Test Tips.
When you've finished studying, come back to the Landlord Education home page to take the Becoming a Landlord Test.
If you are in Minnesota, please stop by my website at http://www.selling.mn You can begin your online search at this site. You will also find a TON of info in the side bar links. To get pre-approved for a Minnesota mortgage, visit http://www.ventureloanapp.com
Besides being a real estate broker of 23 years, I also own a Minnesota based mortgage brokerage in the Twin Cities with my wife. I've owned Venture Development since 1995-visit us online at http://www.VentureLoanApp.com Now, more than ever, you need to know how to help your buyer arrange their financing-whether it be a first time home buyer or a move up buyer.
Our latest episode of "Dollars & Sense" highlights some of the FHA loan products and how they can be used-FHA 203b, FHA 203K, FHA reverse mortgages, and FHA refinancing. Don't forget-FHA loans allow for DPA-Down payment assistance programs with such providers as Nehemiah and Genesis. 100% financing options are all but non-existant, down payment assistance from relatives or qualified charities will fill the gap.
Learning more about FHA and VA loans will help you sell more homes. Conventional underwriting is changing due to pull backs from the private mortgage companies and the guidelines from GSE(government sponsored entities) such as Fannie Mae and Freddie Mac. Declining market conditions and rising foreclosures are creating the tight and conservative lending environment in which we now must do business.
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You can find great local Edina, Minnesota real estate information on Localism.com John Mazzara CFP CLU CHFC CEBS MBA MS CMB is a proud member of the ActiveRain Real Estate Network, a free online community to help real estate professionals grow their business.
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