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.
Have you ever wanted to know the difference between FHA loan types? We've put together a few slide shows that explain some of the characteristics of FHA mortgages. In our Minnesota real estate marketplace, we are seeing 1/3 to 1/2 the financing being FHA. Some of the special rehab money which would be great for scratch and dent REO and foreclosure propertys are not used often enough. Not all lenders offer the rehabilitaion funding. FHA 203K loans are available in Minnesota. You may need to contact a mortgage broker who is able to do FHA financing to find this loan. If you are a real estate agent that wants to sell more homes, you need to make yourself aware of various programs and where you can get these loans. In Minnesota-visit http://www.VentureLoanApp.com
This was our first foray into having a piece of software produced. It came out pretty nice. Feel free to grab the code from the site and embed a calculator in your blog or website. This widget is unique in that it includes a feed for either real estate or mortgage-you choose which feed you want based on the widget you choose to embed. Have fun with web 2.0!
(PRLEAP.COM) Twin Cities, Minnesota-Venture Development-Minnesota mortgage broker-has just launched a consumer friendly website offering visitors the chance to embed a fun and useful tool into their website or blog. This tool was developed in response to the common mortgage question "What is my mortgage payment?" Using this mortgage payment calculator, you can now find out. The site URL is http://www.MortgageWidgets.org. This little tool is called a "widget". The term "Widget" is defined by Wikepedia as "A widget is anything that can be embedded within a page of HTML, i.e. a web page. A widget adds some content to that web page that is not static." Our definition is a little simpler as we define widgets as "just plain fun." If you want to liven up a static webpage, consider adding a website widget. The best part about these calculators is that they are free! Simply copy the code and paste into your html editor. The script will take over and in seconds you will have your mortgage calculator on your webpage.
Venture Development, Minnesota mortgage broker, has created versions of a calculator widget which can be found at http://www.MortgageWidgets.org. What make their widget unique in the marketplace is that these widgets not only calculate a payment and amortization schedule, they also provide a news feed reader with real time mortgage or real estate news. This means the widgets are always adding value to the web user as they view a web page, even if they are not being used for a loan payment calculation.
There is yet another special feature. If a calculator user would like to learn more about various mortgage programs, begin an online loan application or get an interest rate quote for their home loan, they only need to click on the link embedded in the widget. The embedded link will redirect them back to the Minnesota mortgage company’s main website. If a webmaster or publisher prefers a website widget with breaking real estate news, they can select that specific script code for our real estate widget. The real estate web widget has a redirect link where widget users looking for information about Minnesota real estate can go to begin their online home search and learn more about homes in the Twin Cities real estate marketplace.
As a webmaster or publisher you have three choices on what you’d like to display. There is a mortgage payment calculator with a real estate news feed, a mortgage payment calculator with a mortgage news feed, or a series of different size banners offering the calculator that redirect back to the main widget site. The banners will
take up less space and redirect back to the main widget site where someone can then calculate a home loan payment. The banners are fun to view in and of themselves. Use a banner if you want to save space on your website or blog and still want to offer your visitors the chance to find out what a loan payment would be. Visit http://www.MortgageWidgets.org and get started today!
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
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.
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.
If you want to sell more homes, you NEED to understand mortgage financing and the available options. Besides being a MN real estate broker and selling homes for the past 23 years, I've owned a mortgage brokerage since 1995. I run the mortgage business-Venture Development-with my wife.
Because we are involved daily with the mortgage business, we are able to learn about mortgage programs and then educate buyers and seller on how they work. We are able to recognize more opportunities to get deals done because we know how the mortgage financing options fit into the puzzle. My challenge to you, is to locate a few good mortgage providers-lenders or brokers-and have them teach you about ratios, down payment options, arms, level ratings, credit scores, first time buyer programs, and investment property financing options. The more you learn, the more value you will provide to your buyers and sellers. We all can fill out the listing forms, being the best advisor you can be is what separates one Realtor from the next.
Let me tell you about what I believe will save the real estate industry and bring buyers back into the market. Are you ready? Here it is " Down Payment Assistance." Did you know that FHA allows a non profit organization to give a gift (called down payment assistance) to a buyer that can be used for the down payment and closing costs? Why is this HUGE? Your seller can give a give to Nehemiah(a down payment assistance provider) or similar approved 501c3 charity. The buyer of the seller's home can apply for a gift from the down payment assistance provider and use this to buy the home. How many sellers keep reducing the price of their home in order to get it to sell? Does this really help-at least today? Often it isn't the price-it's the terms. Buyer's today may be able to make the payment but can't come up with the required downpayment or closing costs. The down payment assistance programs solve this problem and allow a cash poor but otherwise qualified buyer to purchase the home.
The Twin Cities metro area has been designated a decling marketplace. This means Fannie Mae and Freddie Mac-the two purchasers of the majority of conventional loan products-are requiring buyers to put 5% down. This will make the housing crisis worse and last longer by eliminating otherwise qualified borrowers. FHA loans are sold to Ginnie Mae, and as of this writing, there is no adjustment for a declining marketplace. Now that you know about FHA and the possibility of a downpayment assistance option, you can overcome the 5% requirement.
Many mortgage brokers are not FHA approved because HUD requires audited financial statements and a net worth in the company of 63K. Not everyone can meet that threshold. So, if your favorite mortgage broker isn't FHA approved, you will need to find a broker or bank that is. It is estimated that FHA will finance 1/3 of the loans next year. If you aren't educating your buyers on a way for them to buy a home, I can guarantee you that another agent or lender will.
One of the oldest down payment assistance programs is called Nehemiah. Their website is http://www.getdownpayment.com You can go there to get the specifics. In addition, you can get a listing presentation and order free sign riders once you register at their site. You can also list your home as a participating home on their website for FREE.
When you are in competition for a listing, how many other agents are going to explain this program as a unique way to sell their home? My guess is not many-at least at this time. Grab this competitive edge while you can.
I don't have a lot of information about this yet, because everything right now is preliminary. That being said, keep your eyes and ears open for a new proposal by the Bush Administration that would allow people with mortgages that exceed the value of their home to refinance. How the difference in value-ie negative equity would be handled is yet to be determined. I have talked to many home owners who are upside down. Rather than a short sale or foreclosure, they want to stay in their home. At the same time if they had an ARM, they may have a higher payment that can't be refinanced because of the loan to value. What if you could just refinance what it was worth? Wouldn't that be powerful! The biggest question would be how to deal with the evaporated equity. It will be interesting to see what can be created or if this will die as an idea that just can't be brought to the market.
They have just released the new updated FHA loan limits. Go to this link and find out what your state and county limit has been changed to: https://entp.hud.gov/idapp/html/hicostlook.cfm For Minneapolis -St Paul and the majority of the Twin Cities area the loan limit for single family homes has just been increased to $365K for single family homes. Mpls-St Paul are considered hight cost areas-not everywhere in our state are we considered high cost. This means that going forward, you will be able to finance more homes using FHA financing. FHA financing is important to borrowers who want to be able to take advantage of some of the unique features of FHA mortgage loans. More borrowers and buyers will be able to benefit from this great government program. In the Wall Street Journal today, they had an article saying they anticipated that 1/3 of the loans done this year will end up being FHA. I would estimate it might even be more! Conventional zero down loans are gone in MN for at least a while.
For example, you can do a cash out refinance up to 95% loan to value.
You can finance a home downpayment with a gift program like the Nehemiah program-which essentially makes the home 100% financed.
If you had an ARM that had a teaser rate, and you were current with payments during the 2 or 3 year period before it adjusted, you may be eligible to refinance into a FHA Secure mortgage.
You can do a rehab loan combined with an initial purchase loan under the FHA 203K
The FHA ARM has 1/5 caps with annual adjusters of 1%. Most conventional ARMS are 5/2/5 or 6/2/6 caps with an annual 2% adjuster and a higher margin.
You get a flat .5% MI (mortgage insurance) factor on FHA loans. Conventional loans vary by down payment and credit score.
You can do temporary and permanent buydowns off of the interest rate.
There are product changes on FHA reverse mortgage coming too. They just aren't here quite yet.
These are some of the major differences between a conventional and FHA Loan-there are more. Call us for more information at 952-285-4319 or visit our Minnesota mortgage website
Here's what we know so far: There will be an FHA modernization bill that passes this year. The proposed bill is bouncing back and forth between the House and Senate. Once thing is for sure, or as sure as we can be at this time, the FHA mortgage loan limit will rise to 125% of the median home price with a cap of $730K This will have a bigger affect on areas of the country that don't utilize FHA to a great extent at the moment-Areas such as the two coasts which have more expensive housing. FHA mortgages price better than conventional jumbo loans. This can make that big house more affordable.
In Minnesota, our average home is just over $200K. At the same time, this new FHA loan limit will help as it will bring in another financing option to consider. With regards to refinancing, this might prove to be extremely advantageous. FHA allows you to refinance up to 97% of a homes value. Unlike conventional loans, the mortgage insurance-called MIP( mortgage insurance premium) is not predicated on loan to value or credit scores. For this reason, I could see many people with conventional loans refinancing into an FHA loan in order to get a lower payment. This will also help on reverse mortgages. If the limit is increased, people can do larger FHA reverse mortgages in place of conventional reverse mortgages. So the big question under the new law is how big will the new FHA mortgages be allowed in Minnesota.
Some sticking points revolve around the down payment requirement with FHA. Will they allow a zero down product. Fannie Mae and Freddie Mac allow zero down with programs such as the Flex 100, My Community and Home Possible. FHA may create a similar program. The lower mortgage insurance with FHA will make a dramatic difference in the housing payment when all the other options are compared side by side.
There are a couple of other points of contention, such as down payment assistance and bonding requirement vs. net worth requirement for mortgage brokers that want to offer FHA loans. These points are being fine tuned. The future for FHA loans looks very bright indeed.
To find out more about FHA mortgages and the FHA Secure Mortgage program, visit our website http://www.ventureloanapp.com and specifically our FHA page http://www.ventureloanapp.com/FHA_20_LOANS.html
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