Monday’s: I’m in Love!

This may look like a form letter, but it’s so much more and the reason I have enjoyed my career for 16 years.  I’ve been a Loan Officer for 17, but who are we kidding, 2008 wasn’t a good year for anyone 😉

“We have purchased for ourselves five homes over the years and none of those financial transactions was as smooth as the purchase that you enabled for our daughter and fiancee to achieve”  – Brian and LaNor McDonald

Walking into the office on a Monday morning to this letter is the reason I do what I do. I love to be loved and I work hard to keep that happening over and over.

Fannie Mae Eases Student Debt Policy

Fannie Mae eases rules for borrowers with student loans.

Source: Fannie Mae Eases Student Debt Policy

Great news for homebuyers and homeowners with student loan debt!

Fannie Mae has announced new policies to help borrowers with student debt qualify for a home purchase or refinance loan.

The new rules provide three flexible solutions to current and future homeowners, while allowing lenders to serve more borrowers. These solutions include:
Student Loan Cash-Out Refinance: Offers homeowners the opportunity to pay off high interest rate student debt while potentially refinancing to a lower home loan rate.

Debt Paid by Others: Excludes non-mortgage debt (such as credit cards, auto loans and student loans) paid by someone else from the borrower’s debt-to-income ratio, expanding borrower eligibility to qualify for a home loan.

Student Debt Repayment Calculation: Allows lenders to accept student loan payment information on credit reports, increasing the likelihood that borrowers with student debt could qualify for a loan.
The bottom line is that if you currently carry student loan debt, buying a home or refinancing has just gotten easier!

If you or someone you know is interested in this opportunity, I’d be happy to help investigate options.

Sincerely,

Matthew Royer
HOMES MORTGAGE, LLC
mroyer@homesmortgage.net

Source: Fannie Mae

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Source: Fannie Mae Eases Student Debt Policy

Interest Rates are Trending up: March 8th Market Update

Over the past week, Interest rates have risen by roughly .125%. I always find it funny when I type that out. It seems like such a small and insignificant number, doesn’t it? But if I say that rates have gone from 4.25% to 4.375%, I hear this response…’WHOA’, rates are really rising!

Here’s the brass tacks: Will Interest rates keep rising to 5% or higher this year? Probably not, but I wouldn’t discount the idea of home buyers wrestling with the idea of paying 4.75% or even 4.875% for a home come fall.

Basically what we are seeing right now is a renewed optimism in economic growth. That fuels the stock market and simmers the bond and security market. When bonds and securities lose investment money, long term interest rates rise and that is what we are seeing play out. This has and will always be very emotionally based. If we see a country’s economy collapse (Greece, I’m looking at you!) or the fear of war (Hi North Korea, How many missiles did you fire today?). We could see a reversal quickly.

We could also see a slower rise if the Federal Reserve starts raising the key interest rate more aggressively this year.  YES, that could actually lead to mortgage rates remaining lower because of its potential effect on stock investing.

The bottom line: Purchasing Power for Home buyers is currently the strongest I would expect to see in 2017 and with the demand for homes, this is an idyllic time to sell.

Have a great week!

Matt

Rates: 30 year fixed at 4.375% (APR 4.488) and the 15 year at 3.75% (APR 3.85), FHA: 3.75% (APR 5.141): As always rates change with individual credit scenarios and programs, APRs are estimated based off of a $250,000 purchase price with 20% down and a 740 credit score, if you want an exact quote, call or fill out an application at www.mattroyer.com. These are not quotes, merely a baseline measure to gauge how rates change from week to week.

Matt Royer
Mortgage Consultant, CMC NMLS 366970

Homes Mortgage NMLS 298853

612-232-7646 cell I 651-770-0637 office

www.MattRoyer.com I Apply Now!

 

Is Your Loan Officer Licensed?

Image courtesy of jscreationz/ FreeDigitalPhotos.net

This is a question that each and every person, be it Realtor, homeowner or new home buyer should be asking when entering the mortgage process.

Whether you are comparing a Loan Officer, A Mortgage Broker, A Mortgage Planner or a Mortgage Consultant you will see one thing that is the same with each and every one.  They carry a NMLS ID#. NMLS stand for Nationwide Mortgage licensing system.  Simply having this ID# DOES NOT mean that the Mortgage Professional you are dealing with had to pass a background check or test to obtain it.  In fact.  If they work for a Bank…like Wells Fargo, TCF, Stearns or others.  The governing body, the CFPB (Consumer Finance Protection Bureau) does not require each individual to be licensed as long as they are working for a licensed banking institution.

To answer your question, in theory, this means that an individual could fail the licensing exam or background check and still work for a bank in the same profession.

Quick flashback to 2008-2009 when these laws went into place.  At the time, Mortgage Brokers were placed in the news stories dealing with Mortgage Fraud fairly often, and for good reason, the stories being told were true and terrible acts by unscrupulous individuals. Because of these individuals as well as many Loan Officers and Bankers, the industry is much more regulated.  And it should be!

With this regulation, to be a Mortgage Broker or Mortgage Consultant, there are strict background checks and testing that has to occur to be licensed.  What does that mean?  Well, it means that if I had ever mismanaged my own finances, I wouldn’t be licensed.  If I had ever committed a felony, I wouldn’t be licensed and as far as the testing goes, I’m licensed in MN and WI and have been since the act was put in place in 2009.  5 years later, the NMLS is reporting that over 60% of people who take the exam FAIL.  I’ll let you be the judge on the difficulty of the exam when over half fail to pass the test with resource guides from the NMLS and 5 years of study guides and resources available for preparation. I wish this was more transparent to the consumer in many ways.

I am obviously biased as someone who has adhered and exceeded these guidelines but I believe the decision comes down to this: Do you want a licensed and qualified professional handling one of the biggest financial investments of your life or do you want to hope that the Loan Officer you choose to work wasn’t the individual who could meet the requirements?

Moving Day: Buying and Selling a home the same day

Image courtesy of Ambro / FreeDigitalPhotos.net

Some homeowners have the luxury of buying a home, moving in and then selling their current home or close on the sale of their home afterwards.  Wouldn’t that be nice?

The more common scenario is like the Johnson’s closing last month (note: I use generic names for privacy sake of my clients, I will never use their real names in this blog).  Jim and Julie Johnson planned to use the money received from the sale of their current home to help buy a new home for their growing family; Four children and counting!!

We now have two options.  First would have been to wait until they sell their house, find temporary housing and then buy a new home afterwards.  Even if you’re single, this is a pain in the butt to say the least, unless you are that rare species of person who enjoys moving and all the packing and coordinating to go with it.  For the rest of us, there really is only one good option.  To coordinate the sale of your home and the purchase of your new home so they close on the same day and that is exactly what the Johnson’s intended to do. 

To make sure that this process goes as seamlessly and stress free as possible, there is an added level of communication that needs to happen and simply put, you’re average loan officer does not take this as seriously as it needs to be taken.

This isn’t just about putting our purchase mortgage together for the Johnson’s now.  It’s also ensuring that Title companies for both the sellers of the new home, our loan AND the loan of the buyers of the current home are all in consistent communication.  The only way to ensure this is for me to make sure that everyone has the contact information for the other parties involved and to keep checking in for updates. This is simply step one, in addition we have buyers/sellers and Realtors that will need to be kept in the circle of communication so they can instruct their clients and keep everything moving on their end  as smoothly as possible.

This isn’t a science, it’s simply empathy.  When you care about someone, you think about what would be in their best interest and act accordingly.  Jim and Julie Johnson are pulling their hair out trying to pack boxes, make sure the children understand how the move will go and why it’s happening as well as making sure the moving trucks are ready and just the right time per day.

That’s all they should be worrying about because they have entrusted me to keep my word and make certain that their new mortgage will be ready to close BEFORE the day occurs.  Each of my clients is told from the very beginning how the loan will progress and the time frame I will need to ensure that moving day is the only thing to worry about.

When you’re out with your Realtor looking for homes, ask them about some of their closing ‘horror’ stories.  Once you hear these, you may come to realize that obtaining a mortgage is not a commodity based on the best rate and fees, it’s about finding an expert professional so you can avoid ever being mentioned in the list of horror stories.

Jim and Julie Johnson sold their home at 9 in the morning, then bought their new home at 11 with the moving trucks scheduled to be on the doorstep at 1.  With the babysitter (Grandma) coordinated for the kids, everything went as well as they could have hoped for….and that makes me smile.

-Matt

New Appraisal Regulations: here’s what you need to know.

This industry is constantly in flux.  Regulation changes from the Government or Lenders are never far away.  Keeping on top of these changes can be a daunting task, making it tricky to determine what will pertain to you and your clients.

Appraisals: As of 2014 (old to some, new to others) there is a new policy in place that allows borrowers a fair chance to review their appraisal before closing.  Unfortunately, this can also cause quite a headache.  Here’s how it works and what to plan for.

How it works: The borrower (homeowner or homebuyer) is required to have 3 business days to review their appraisal before closing on the loan.  To account for mailing time, Lenders require 6 business days (3 for mailing and 3 for review).  You cannot close on your loan until this takes place.

Complications: Each of the Lenders we work with have determined this to be based on the final appraisal, so if the appraiser needs to correct a typo or a new construction needs a completion certificate, the wait time will START when the Bank receives this appraisal.  For Home Purchases, this can cause a delay in closing.

Shorten the wait time:  Borrowers can sign a form waiving their rights to the 3 day review period. This will cut the wait time in half as lenders still require the 3 day time to mail.

Bottom line: In most cases, this will not be an issue as long as your Lender has been given enough time to complete the loan and the order for the appraisal is placed immediately.

That being said, there will be times when this will be an issue, most often with new construction and the need for a completion certificate. Knowing this is a potential hurdle beforehand and communicating that to everyone involved in the transaction is a great way to help ease stress for all parties involved and allow everyone to plan for the worst while expecting the best.

-Matt

http://www.mattroyer.com

 

Image courtesy of ddpavumba/FreeDigitalPhotos.net

 

Our Paperwork is wrong: Should we just sign it to close on time?

Succinctly Put: NO!  Now, let me tell you a story:

“Wally” and I are working to refinance a home he bought on Contract for Deed. He and his wife divorced in 2002 and over five years later, he purchased his current home on Contract for Deed (CD).  When he signed the CD, it listed him and his wife as a married couple.  He asked about it and was told to simply sign it to avoid from having his closing delayed.

If he didn’t sign, he would be stuck trying to find a place to live for 3-4 days as well as juggle scheduling the movers to name a few of the biggest stresses.  So, he goes ahead and signs the form as-is and moves in that afternoon.

Flash forward to present and he is finally at a point to officially move this CD into a mortgage in his own name and own the home outright.  Here’s the rub: A Contract for Deed is a legally filed and binding document. This means that his ex-wife, is now signed into title as his now current wife, giving her full ownership rights to the new home.  HIS EX-WIFE NOW OWNS HALF OF HIS HOUSE!

In an amiable situation like this one, this can be resolved by having her sign a Quit Claim Deed that relinquishes her ownership rights.  Fortunately for Wally, She was willing to sign a QCD.  If she hadn’t, Wally would have a potential legal battle on his hands and I’m sure the topic of ‘Fraud’ would be brought up as well for knowingly signing a document he knew was not accurate.

Simply put, making moving arrangements or postponing them can be a huge hassle, but if there is something incorrect on your final mortgage documents, you need to take a step back and consider the long term issues that can end up being much more damaging.

-Matt

 

Image courtesy of phanlop88 / FreeDigitalPhotos.net

Landlord won’t provide your payment history? Get creative!

Many potential Home buyers already live in a house, the only difference is that they rent from a Landlord while they prepare for owning a home themselves.  In many of these cases, the Lender for a new purchase will require a rental history, so what happens when your landlord refuses to provide it.

This was an issue that ‘Cathy’ was facing when we first spoke.  Her husband, four kids and her wanted to move out of their rented home and finally buy a home of their own. Unfortunately, there had been some instances of poor communication and frustrations between her and her landlord. Because of this, he refused to provide a rental history for Lender.

On top of this, Cathy sometimes paid in cash, sometimes paid with checks and paid varying amounts over the course of the month due to income fluctuations.

If she had paid by check: We could get a copy of the cancelled checks to prove her payment history. With cash there are very few options.

My first thought was a personal plea to the Landlord. That went less than ideally. So I had Cathy get me every single check she had sent over the past 2 years along with each bank statement. When reviewing these I noticed a consistent withdrawal on the same day one of her checks were written out.  Cathy then mentioned that the cash she paid with was always taken out at an ATM, on the same day each time.

Cathy now owns her new home, having provided the underwriter with her bank statements, check copies and a detailed explanation stating exactly when each payment was made and what source they were made from to prove she was never late on a payment in two full years of renting.

In a very rare situation, listening to the borrowers story can help put the pieces in place to get the evidence needed for a gap like this.  Ideally, if you are renting…pay by check! It will make your life much easier when the next step comes and you take the leap to become a homeowner!

Have a great week!

-Matt

 

Image courtesy of ponsulak / FreeDigitalPhotos.net

Mom’s selling her house…can I buy it?

A while back I had a client walk into the office and ask me this very question.  With a business based on referrals, it’s rare we see anyone walk into the office randomly and ask for a pre-approval but that’s exactly what “Nate” did.

You may have heard the term ‘Arms Length Transaction’  which is the term used for buyers and sellers that are not related.  This is the most common type of home sale.  When someone is buying from a relative, it’s referred to as a non-arms length transaction and Lenders (or banks) each have their own rules regarding what can and cannot be done in regards to  financing.  If this is the case, make sure you let your Lender know so they can take the appropriate steps and ensure what you will be allowed to do before making any promises. Not all Lenders are created equal, trust your gut.

In Nate’s case, I knew the Lender we were working with would suit his needs. There were several items that needed to be attended to:  He didn’t have a down payment for buying the home, he didn’t want to use a Realtor to keep costs down and he wasn’t sure what price his mother would agree to.  Okay…

Here’s how we managed these speed bumps:  First, we decided that the sales price should be fair to both sides, so we had the appraisal done first and then each of them could decide it they wanted to buy/sell for that value or agree to lower terms.   Second, we took that price and determined what Nate would need for a down payment and had his Mother generously give him a ‘Gift of Equity’ which was used in lieu of a down payment.  Finally, I referred Nate and his mother to a good friend of mine who happens to be a great Real Estate Lawyer.  He drew up the contract for them so we could proceed.

Bottom line: Nate walked into my office with a job and okay credit history with the hope of keeping his childhood home in the family.  He walked out a month later with the keys to the home that was now his. Where is his Mother going to live now?  I never got a straight answer??  I hope she treated him well as a kid!

-Matt

 

 Image courtesy of Kookkai_nak/FreeDigitalPhotos.net

Communication: Have it your way!

I can’t remember which food chain used the “Have it your way” tagline.  However I do think it’s a quick and simple reminder for myself to work with clients the way they prefer to communicate.

An old friend of mine has purchased two homes over the past decade.  The second one coming this past year for him, his wife and new daughter as they made the shift from Fargo, ND to the St. Paul area.  There’s nothing special or significant about those details.  The part that is significant is that in both cases, we never once spoke.

With “Bart’s” job, he spends a lot of time in front of the computer and when he’s done with work for the day, we’re both knee deep in parenting. Something we both place a very high priority on. With the nature of his job and our evening schedules, it made sense for both of us to communicate by email.  I do spend a lot of time sending emails to almost all of my clients, but that usually coincides with personal visits or phone calls for a good portion of the process.  The emails tend to be a supplemental communication system.

With Bart, not 1 phone call…not one word spoken. We went from start to finish and finally spoke face to face at the closing.  It was great to see him again and spend the closing looking through the pictures of his budding family while he signed the final paperwork.

Oh, right.  My point.  I guess we can stop the rambling and move to that. Some clients live by email, some live by phone, some live by text and in any given scenario, using only one of these is never ideal.  The goal is to cater to your client in the best way possible and communicate with them on their terms.  When you find the right mix, it’s unforgettable for both you and your client.

With his permission, here’s a quote from our final email before the closing:  “Thank you so much on getting me the deal you did. Isn’t trust a wonderful thing? We had just about the whole thing done before even having a phone conversation.”

-Matt

Image courtesy of sippakorn/ FreeDigitalPhotos.net