Chance Gates' Blog » Loan

Guaranty Fee Increase

Chance Gates — Thu, 19 Jan 2012 20:53:48 +0000

The U.S. Congress recently passed a two-month payroll tax cut extension. The $33 billion package is funded by a 10-year increase in the Guaranty Fees that Fannie Mae (Fannie) and Freddie Mac (Freddie) charge lenders to guarantee home loans.

This change is effective for all loans delivered to Fannie and Freddie at the beginning of the second quarter of 2012. For example, the cost of a $200,000 mortgage will go up about $11 per month. Over the life of the loan, these costs are anticipated to be about $4,000.

These changes will also increase the cost of FHA and VA loans. However, the government has not released information as to the timing of these changes.

All lenders — by law — will be adding this increase to their pricing. Some lenders are adjusting their rates with a one-time increase.

Thanks to my friends at Prospect Mtg

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As a Reno/Sparks Nevada real estate professional and property manager, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog. Please feel free to use my back door to the MLS and search the houses available in the Reno/Sparks and most Northwest Nevada neighborhoods. I can be reached by email @ chance@ballard-company.com http://www.myspace.com/chancegates . You can also follow me at http://www.twitter.com/chancegates . To checkout some of my property manager services goto http://chancegates.com/property-management-services/

If you are behind on your house payment and looking for a loan modification, go to making homes affordable

If the modification fails, contact your local real estate professional to help short sale your home. To make sure there is no deficiency judgment a homeowner might find it necessary to hire an attorney.

Law to help Tenants Whose Landlords Goes in Foreclosure

Chance Gates — Sun, 02 Oct 2011 19:54:24 +0000

A new law passed by Congress and signed yesterday by the President provides protections for tenants whose landlords fall into foreclosure. Under the Helping Families Save Their Homes Act, tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. The bill also provides similar protections to housing voucher holders. The protections go into effect immediately and expire at the end of 2012. The new federal protections do not preempt city and state laws which remain in full force.

It is highly advise you consult with an attorney to answer any legal questions.

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As a Reno/Sparks real estate professional, I encourage all questions and comments on the Reno/Sparks real estate market or any of the articles posted in this blog. Please feel free to use my back door to the MLS and search the houses available in the Reno/Sparks and most Northwest Nevada neighborhoods. I can be reached by email @ chance@ballard-company.com http://www.myspace.com/chancegates . You can also follow me at http://www.twitter.com/chancegates . If you are behind on your house payment and looking for a loan modification, go to making homes affordable For a free copy of my report “5 Steps For Reno/Sparks Homeowners To Prevent Foreclosures” go to my about page http://chancegates.com/about and ask for more information on preventing foreclosures. or to request a modification. If the modification fails, contact your local real estate professional to help short sale your home. To make sure there is no deficiency judgment a homeowner might find it necessary to hire an attorney.

From the Old Farmers Almanac Cut Cost of Cold Snaps

Chance Gates — Tue, 20 Sep 2011 16:23:07 +0000

http://www.almanac.com

During the chilly months of winter, no matter what heat source you use—oil, gas, electricity, or wood—you can cut costs by adopting temporary measures to keep the thermostat turned down. Here are some money-saving tips for cutting the cost of cold snaps.

Temporarily close off heat to some rooms by shutting doors. (This requires a heating system that can be controlled room by room.) Shut the doors to unheated closets, the pantry, and the basement and attic.
Hang blankets over the windows at night. Tape or thumbtack the sides and bottom of blankets to the walls or windowsills to maximize the insulation value. (Press the tacks or tape under the bottom of the sill and over the top of the frame to hide any damage to the finish.) Remove the coverings on the south side of the house during the day.
Cover cracks around doors and windowsills with rugs, newspaper, towels, or other insulation.
Use electric space heaters in living or work areas. These are more efficient than the furnace for localized heating, and they will allow you to set the thermostat lower for the whole house.
Put on a sweater.
Cook a hot meal.

What do you do to save money on heat in your house during the winter? Comment and let us know!

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Escrow Accounts: What’s the Deal?

Chance Gates — Sat, 16 Jul 2011 21:07:48 +0000

http://members.houselogic.com/articles/escrow-accounts-whats-deal/preview/

By: Susan B. Weiner

Published: October 22, 2010

Does your escrow account ever cross your mind? Probably not. But forgetting to monitor it can lead to lost money and a big headache.

Escrow accounts: lenders love them; you might not

As handy as they are, you’ll find some significant hitches:

You lock up your money before your tax and insurance payments are due, since your lender is taking the money out each month, often long before the tax payment is actually due.

Your lender usually doesn’t have to pay you interest on your escrow account—it varies by state.

Your lender may screw up paying taxes or insurance, and even though it has to fix mistakes, you have to make the time and effort to follow up.

There may be tax advantages to timing your property tax expenses—but you can’t do that if you’re paying a flat fee in escrow each month.

But your lender may insist on an escrow account because it:

Helps guarantee your insurance and taxes will be paid.

Ensures your lender will get the first claim on your house if you default, ahead of the local government.

In fact, your lender may do you the honor of charging you a flat fee for opting out of an escrow account, or it will add 0.25% to 0.5% to the loan amount if you decline to use an escrow account.

How to manage your escrow account

Your lender has to give you an annual escrow account statement and refund any available balance when you sell your house or refinance your mortgage. Check your escrow account statement carefully:

Make sure everything adds up. “If I have my escrow statement, my property tax bill, and my homeowner insurance declaration page, and everything matches up, then I’m fine,” says Debbie Siegel, president of Westchester Mortgage in Newton, Mass.

Check the size of the escrow account. Lenders are allowed to keep a reserve of no more than two months in payments in most states, and in some situations it’s even less. Your REALTOR® or lawyer can give you the skinny in your case.

Contact your lender in writing if you find a problem in your escrow account. If your lender missed an insurance payment, it should pay any late fees as long as your mortgage payments are current, according to the U.S. Department of Housing and Urban Development. If your insurance is canceled as result of your lender’s late payment, you can sue your lender.

Know your rights. Your lender must acknowledge your letter within 20 days and try to fix your problem within 60 days. If you’re still not satisfied, file a complaint with HUD.

Don’t worry, however, if your escrow account balance is temporarily negative. It’s probably due to a recent increase in your taxes or insurance. Your lender will pay your taxes and insurance, although you will need to reimburse your lender for the shortfall.

A final word: Usually basic home owners insurance will be paid out of an escrow account. If you have extra coverage for your original Matisses, for example, you may need to pay that premium directly to your insurer.

Susan B. Weiner has written on financial topics for Bottom Line/Personal, Financial Planning, Wealth Manager, and other national publications for more than 15 years. She learned firsthand that when your house combines two lots, your escrow account may initially fail to pay the tax bill on the second lot.

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What Affects Credit Scores? 7 Misconceptions

Chance Gates — Sat, 09 Jul 2011 20:54:42 +0000

http://members.houselogic.com/landing/credit-scores-072011/?nicmp=rcrim&nichn=editorial&niseg=narwr&cid=WR07062011:22837&ed_rid=1698691

By: Gwen Moran

Published: October 22, 2010

If you’re trying to raise your credit score to get a good rate for a refinance or HELOC, you might be surprised by what affects—or doesn’t affect—your score.

More money improves your credit score

False. Your level or sources of income don’t affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores.

Ownership of several credit cards can hurt your credit score

Mostly false. Having many credit lines isn’t necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It’s best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit score.

Opening and closing credit lines can hurt your credit score

True. New credit applications can decrease your credit score, so be careful about applying for new credit cards or personal loans before applying for a HELOC, second mortgage, automobile loan, or other large line of credit.

Surprise: Closing existing credit lines may also hurt your credit score, since it’ll damage your debt-to-available-credit ratio. A good rule is not to make any credit changes in the months leading up to a major credit request, such as for a HELOC.

Consolidating credit lines will help your credit score

Mostly false. Although it may seem like a good idea to move all your balances to one card, that can actually hurt your credit score, since your debt-to-available-credit ratio will spike on that card, says Weston.

However, credit expert Harrine Freeman says such a slight decline isn’t necessarily a deal-breaker for a loan, especially if the card has a lower interest rate and will allow you to pay off the balance sooner. Your score will increase as soon as that ratio goes down.

Changing jobs can hurt your credit score

Partly true. Taking a new job or losing your job doesn’t affect your credit score. However, if you have a spotty employment history, lenders may hold that against you in making a loan. Dips in income may signal that it could be difficult to pay bills in a timely manner.

Co-signing for others can hurt your credit score

Partly true. Simply co-signing on a loan for someone else may not affect your score, but if that person is late on paying the loan, it’s likely to show up on your report, says Freeman. And that’s a nasty surprise if you didn’t know the person was late.

Judgments and liens aren’t considered in your credit score

False. If you’ve had a judgment or lien filed against you, it’s considered in your payment history, which represents 35% of your score.

Similarly, while most utility companies don’t report payment history to credit bureaus, your account will likely be reported if it is seriously delinquent and referred to a collection agency.

Additional details on how to manage your FICO score are available on the FICO site.

Gwen Moran is a freelance business and finance writer from the Jersey shore. She’s the co-author of The Complete Idiot’s Guide to Business Plans and writes frequently about real estate.

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Down Payment Plan May Price Buyers Out of Market

Chance Gates — Thu, 07 Jul 2011 20:48:00 +0000

http://www.realtor.org/rmodaily.nsf/f3c66d0c6457c1e1862570af000cb13b/c615c2ff2b23951c862578c4004f1789?OpenDocument&cid=WR07062011:22822&ed_rid=1698691

How much a home buyer should have a for a down payment on a home has been up for dispute among policymakers. Some recent federal regulators and lawmakers calling for a 20 percent or 10 percent down payment in order for mortgages to be considered a “qualified residential mortgage” and not subjected to extra fees.

However, such stringent down payment requirements could price many home owners out of the housing market, argues a growing number of consumer housing advocates. (Read more about the National Association of REALTORS®’ stance).

In fact, for many creditworthy home buyers in occupations that don’t boast high median salaries, they might have to wait a decade or even longer to meet the down payment rule.

The Center for Responsible Lending, which has argued that 10 percent or 20 percent down payment requirements are too high, has a chart on its Web site boasting the length of time it would take borrowers of different occupations to save enough for a 10 percent down payment on a 2010 median-priced $172,900 home.

▪ U.S. Army Staff Sergeant: 16 years (median salary: $30,176)
▪ Public school teacher: Nearly 15 years (median salary: $33,530)
▪ Firefighter: 10 years (median salary: $47,730)
▪ Police officer: Nearly 9 years (median salary: $55,620)

“We’re not advocating for zero percent down,” Kathleen Day, spokesperson for the Center for Responsible Lending, told The New York Times. “We think down payments are good. But we think the market should set them, based on the underwriting.” (That is, based on the borrower’s credit history and income and debt levels.)

The down payment proposal comes as part of new rules for mortgage lenders in the Dodd-Frank law. Federal agencies are trying to set criteria for what should be considered a reasonably safe mortgage or QRM. Lenders issuing a QRM will be able to sell the loan to an investor and avoid retaining any of the risk. However, lenders will consider non-QRMs more risky since they’ll have to retain a 5 percent ownership. (Loans insured by the Federal Housing Agency would be exempt.) For borrowers who are unable to meet QRM, they would have to pay more for their loans because lenders would have to boost interest rates on their loans to cover the extra costs.

What You Can Do

Lawmakers have extended the public comment on the new down payment rules to Aug. 1. The REALTOR® Action Center has issued a call for real estate professionals to help ensure their clients have access to affordable mortgages. To send a letter to your state lawmakers, visit REALTOR.org.

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Treasury Department Releases HAFA Guidance

Chance Gates — Sat, 28 May 2011 19:54:25 +0000

http://www.realtor.org

On May 18, 2011, the Treasury Department released an update to the Making Home Affordable Program (MHA) that becomes effective September 1, 2011. The update directs participating servicers with a participation cap of $75,000,000 or more to establish and implement a process through which borrowers that are potentially eligible for HAMP, Home Affordable Unemployment Program (UP) or Home Affordable Foreclosure Alternatives Program (HAFA) are assigned a relationship manager. The relationship manager will serve as the homeowner’s single point of contact and will promote compliance with MHA program requirements and timelines between all parties until all available home retention and non-foreclosure liquidation options have been exhausted. No later than the effective date of this Supplemental Directive, the servicer must assign a relationship manager to a delinquent borrower or a borrower who requests consideration under imminent default immediately upon the successful contact with the homeowner and the determination that the servicer will consider the homeowner for HAMP, UP or HAFA. Relationship managers must provide written notice to the borrower within five business days of the assignment, which must include a toll-free telephone number and at least one other method by which the borrower may directly contact the relationship manager, as well as the preferred means by which documents should be delivered by the borrower to the servicer. This update does not apply to loans owned or guaranteed by Fannie Mae or Freddie Mac.

Additional information on the MHA updates can be found in Supplemental Directive 11-04.

Making Home Affordable Supplemental Directive 11-04

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Fannie Mae HomePath Buyer Incentive

Chance Gates — Thu, 21 Apr 2011 21:31:19 +0000

www.homepath.com

Fannie Mae is currently offering buyers up to 3.5% in closing cost assistance through June 30, 2011.

The HomePath property buyer must meet the following qualifications to be eligible:

Buyers and/or selling agents (the agent representing the buyer) must request the incentive upon submission of initial offer in order to be eligible.
The initial offer must be submitted on or after April 11, 2011 and close by June 30, 2011. If an initial offer was made prior to the effective date, the offer is not eligible for the incentive.
The sale must close on or before June 30, 2011. No exceptions will be made to this deadline.
Only buyers purchasing a HomePath property as their primary residence may receive up to 3.5% in closing cost assistance. Second homes and investment properties are excluded from the incentive.
Buyer must sign the Owner Occupant Certification Rider to the Real Estate Purchase Addendum.
If a buyer’s total closing costs are under 3.5%, the difference will not be available as a credit to the buyer.

Note: Fannie Mae can give no assurance on the time required to close, but initial offers submitted after May 15, 2011 are particularly questionable for closing by the incentive deadline of June 30, 2011.

In a few states, a bonus promotion may be available to selling agents who close on an owner occupant property meeting the above terms & conditions.

Retail and public entities are eligible for the incentive; however pool and auction sales are not eligible.

The incentive may not be available for a property where Fannie Mae acquired the property in connection with financing under a reverse mortgage. Ask the listing agent for details

Fannie Mae reserves the right to remove any property from promotion or end the promotion at any time. Any dispute over the payment of the incentive shall be resolved by Fannie Mae in its sole discretion.

Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5% incentive. For example, the lender may consider the incentive

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Mortgage Free? Help Home Owners Learn How

Chance Gates — Tue, 19 Apr 2011 20:27:57 +0000

http://www.realtor.org/rmodaily.nsf/f3c66d0c6457c1e1862570af000cb13b/8929c93ef2c9a10b862578710052da32?OpenDocument

Do your clients aspire to live mortgage free? Here are a few ways they can pay off their mortgage early, according to a recent article at Bankrate.com.

Image via Wikipedia

Add a little payment to principal. Use mortgage calculators to see how adding a little extra payment to your principal–even $100–can shorten the length of your loan and reduce the amount of interest you’ll pay on it. Tracy Piercy, CEO of MoneyMinding.com, says home owners can just round their monthly payments up (e.g. $644 to $650) to find savings too–just an extra $6 per month on a $200,000, 30-year loan can save you four payments at the end of your mortgage loan.

Refinance. Interest rates are low and you can often can get an even better rate if you refinance into a shorter loan term. For example, 15-year loans are a popular refinancing choice. You’ll have higher payments, but you’ll be paying less overall interest. Or if you don’t want to commit to the higher payments, take out a 30-year loan but make payments as if you had a 10- or 15-year loan, experts recommend.

Make biweekly payments. Pay half your regular mortgage payment every other week instead of once a month. By doing so, you’ll have made 13 full monthly payments by the end of the year and on a 30-year mortgage, that extra payment can chop about six years off your mortgage.

Source: “4 ways to pay off your mortgage earlier,” Bankrate.com (April 2011)

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Investors, Foreign Buyers Cashing in on Market

Chance Gates — Thu, 14 Apr 2011 20:04:42 +0000

With affordability at an all-time high, the number of investors and international buyers taking advantage of bargains has reached a record number in all-cash purchases — and some experts predict that number will only grow higher.

A record 33 percent of existing-home sales were made to cash buyers in February, the National Association of REALTORS® recently reported. The proportion of cash deals could hit 40 percent by the end of this year, predicts Thomas Popik, research director for Campbell Communications in Washington, which conducts monthly surveys of 3,000 real estate brokers.

“Lenders have only been willing to lend to the cream of the crop in terms of credit scores,” says Walter Molony, an NAR spokesman. “As a result, you’re seeing a depressed level of traditional buyers.”

But it’s not just investors moving in: Many of these cash deals are also coming from a growing number of international buyers. About 55 percent of international buyers paid cash for their U.S. homes, according to an April 2010 report by NAR.

The Cash Buyer Advantage?
Cities where about half of all purchases were done with cash include Detroit, Miami, Las Vegas, and Phoenix, in which prices have dropped considerably and foreclosure rates remain high, says Oliver Chang, a housing market analyst with Morgan Stanley.

Short sales and foreclosures accounted for 59 percent of last year’s cash sales, according to a report by Morgan Stanley.

“You buy the house at a discount with cash. Then you flip it almost immediately to the first-time home buyer who’s using a mortgage, simply because they were not able to buy at the foreclosure sale,” Chang says.

Lenders increasingly reject mortgage applications for foreclosed properties because appraisals are often too far below the agreed-upon price or the transactions take too long to close, says Popik.

With tightened lending standards, cash purchases can provide buyers with more leverage and allow buyers to close properties more quickly.

Mike Simmons Troy, a Detroit real estate investor, says that if a house is listed at $40,000 and a buyer offers $35,000 cash, “nine times out of 10, the bank will take the cash.”

Source: “Cashing in on Bargains,” Detroit Free Press (April 10, 2011)

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