Positive Real Estate Professionals

Fred Chamberlin wrote an article on his new website entitled “Eugene/Springfield, Lane County Real Estate Mortgage News“. The reason that I did not use his title was that I think the title is specific to his area and we cover so much more than that. With that being said, the reason I chose this article is it has great bones about misconceptions to mortgages. Being in the industry, we sometimes forget the layman does not tend to know as much as we know of the mortgage world. In this post, Fred sheds some light on some of these things.

As always, please ask if you have any questions concerning this or any post on PREP.

Via Fred Chamberlin of EugeneLoanGuy on Neighborhood Expert Online:

Today, I would like to correct and educate regarding some things that we in the mortgage business just assume that everyone knows, since we are always telling people about it. This has to do with Real Estate Loans, mortgage limits and seller contribution. Also, I want to touch on the Stimulus Package, First Time Home Buyer Tax Credit and local lending practices.

I just returned from my first attendance at the Springfield Chamber of Commerce Greeters breakfast meeting. One thing I have to admit, those people are really fired up for so early in the morning. It appears to be a great place to network and pick up some good contacts. The presentation today was about the Lane County Real Estate market and had a lot of good information about sales trends and what has been going on in our local market place as far as days on the market and sales prices.

Near the end of the presentation, the Realtor® tried to answer some questions having to do with mortgages and I felt that maybe I hadn’t done a good enough job of getting the word out about changes that have and are taking place in our market.

The first one was an easy miss, since it just happened this week. FHA raised the Lane County loan limit from $272,050 to $343,750 for a single family home, the same limit we had at the end of 2008. This will be especially helpful with purchases of foreclosures and short sales. Next was seller contribution to closing costs. In an FHA loan, the maximum seller contribution is 6% of the sales price and can be used to pay for closing costs and prepaids (taxes, insurance and interest). In addition, the minimum down payment for FHA loans is 3.5%, not 3% as of January 1. Seller contributions on conventional loans vary from 3% to 9%, depending on the down payment. Conventional loans have a maximum loan amount in Lane County of $417,000 for a single family home.

The Stimulus Package has a provision in it changing the First Time Home Buyer Tax Credit from $7,500 to $8,000 and making it an actual credit if you stay in the home for three years or more. This Tax Credit is available for all loans, FHA, VA, USDA, and conventional. Additionally, it is now available for those using the Oregon Bond program where the original tax credit was not. The full tax credit is 10% of the purchase price up to $8,000 and for buyers making up to $150,000 (joint) or $75,000 (single). A reduced credit is available if the buyers make more than this amount.

Credit requirements are changing for nearly every loan program. Although FHA does not have a credit score requirement, the actual lender may. Income documentation is a firm requirement on all loans except for streamline FHA and VA refinances. In this increased activity that has resulted from lower rates, I know that a lot of the local lenders are taking anywhere from 45 to 60 days (or more) to close a loan. With our local underwriting and doc drawing, we are still able to close purchase transactions in 30 days or less. I know there is a lot here, but I believe that it is very important that people have the right information, not just a portion of the news. So, give me a call at 541-342-7576 to discuss your particular circumstances. I am your Neighborhood Expert Online.

With economic turmoil in many real estate markets it should come as no surprise that foreclosures are also up in many areas of the country. This awful truth has resulted in many properties now sitting empty. The following article by Fred Chamberlin presents some great ideas on how to revamp some of these vacant properties to make them more environmentally friendly and more attractive to potential buyers.

Via Fred Chamberlin of FHA Loans Oregon:

Another reason to use an FHA 203k Streamline rehab loan: Foreclosures are bringing down the Eugene/Springfield and Lane County Real Estate market. My reasoning on this has to do with the condition of many of the foreclosed properties. Many of them aren’t livable and may have been vacant for some time. In many areas of the United States, entire neighborhoods sit vacant, havens for crime and an eyesore to surrounding neighborhoods. Although I haven’t seen this scope of a problem here, I do know that there have been cases of squatters moving into foreclosed (or about to be foreclosed) properties and using them as a base of criminal operation.

How about starting a movement to help take these properties and provide affordable green renovations for buyers in need through FHA 203K renovation loans? Not only would we be fulfilling the mission of FHA 203K, to restore and preserve America’s existing housing stock, but also incorporating money and energy saving green improvements into those homes.

Although solar panels and wind turbines are “sexy” improvements, I want to be realistic about what the individual can do. For that, I am talking about simple and affordable 203K streamline improvements like EnergyStar windows and appliances, low flow toilets and showers with on demand water heaters. Not only would these kind of improvements benefit the planet, but they would also help the low to moderate income home buyers save on their monthly energy bills. That makes their FHA mortgage more affordable, lessens the likelihood they default and helps restore the integrity and quality of the neighborhood by ensuring that its homes are in good condition, energy efficient and OCCUPIED!

The FHA 203K Streamline Rehab program is the ideal way to bring these homes back as great representatives of their respective neighborhoods. When you combine this with the $8,000 Tax Credit for First Time Home Buyers and exceptionally low interest rates, it really is the ideal time to buy a home. Call me today at 541-342-7576 to make an appointment for your one on one time with me.

When Rich and I started up PREP, we made a commitment to bring positive news to the public’s attention. Too many times the media puts out statements that are so generalized it leaves mortgage people like myself and Fred Chamberlin scratching our heads. Below is another great post by Fred that might help you clear up some misconceptions that you have heard. As always, if you have questions, then please ask.

Via Fred Chamberlin – Eugene/Springfield’s #1 Experienced FHA Mortgage Consultant:

My last blog entry discussed conventional mortgage loan pricing and how to determine what PAR pricing is. Without that information, how can you know that the 4.5% interest rate you are being offered is really a great rate. Now, I want to go over the other pricing issues with conventional mortgage loans. Real estate purchase and refinancing are subject to a number of different pricing issues. First time home buyers should pay special attention to the following information. This information is available to the home buyer if they ask for it, but most times they only want the bottom line.

In my last blog, I showed how the PAR rate was calculated but I didn’t go into the additions and subtractions that effect the final pricing. Most pricing are calculated by a combination of credit score (CS) and loan to value (LTV). So, let’s discuss how these work together. Every lender will have their own additions and adjustments, these are an example.

First, purchase of an owner occupied property:

1. 740 is the new standard for conventional loans.
2. Below 620 will probably not be accepted for conventional pricing.
3. 60% and below LTV gets the best pricing. There are no adds for under 60% for any credit score above 620 and actually subtractions for CS over 700.
4. Over 60% to 80% will go up in cost. For example, 640 CS at 80% will cost 2.25% in fee. Over 80% actually comes down in loan cost because of mortgage insurance protection.
5. 5. If the property is a 2-4 unit property, there is a cost of 1% fee.
6. 6. If it is a manufactured home (M/H), there is a 1.5% fee.

So, add all that applies and get the bottom line. Example, 650 credit score, 20% down, manufactured home is an addition of 2.25% for the CS/LTV and 1.5% for M/H or a total of 3.75%. Now, looking at Friday’s pricing, we have 4.875 at close to par (you never get exactly there) and 5.25 with a 1% rebate. So, the choice is paying a total of 4.75% in fee to get a 4.875%/5.361% APR rate or 3.75% in fee to get the 5.25%/5.660% APR rate. That is one of the reasons that FHA loans are often more cost effective for lower credit scores.

Now, if it is a cash out refinance, and that includes paying of a second mortgage as part of this loan, the cost goes up again. Even with a credit score of 740, there is a cost for a cash out refinance over 70% loan to value. Rate sheets are not for public dissemination but I am always willing to discuss what the rates are and the actual costs based on loan to value and credit score. If you are interested in finding the loan that is right for you, ask the right questions.

If it is an investment property, the additions are even more, from 1.75% to 3% depending on loan to value again, in addition to the other additions.

Calling someone on the phone and asking what the rate is won’t get you the information that you need to make a decision. As you can see, there are several things that are involved in finding out what your personal mortgage rate is. Oftentimes, first time home buyers are not aware of what goes into quoting a rate and will go with what they are told on the telephone. Anyone that quotes a mortgage rate on the telephone doesn’t have enough information to make that decision. Develop a relationship with your mortgage lender.

The United States Department of Agriculture may not seem like a vehicle for home loans but as Fred Chamberlin explains in another excellent and informative post, utilizing the often overlooked USDA mortgage programs can be a real benefit to many prospective home buyers. Though Fred primarily discusses the use of USDA loans in Oregon and the Pacific Northwest, these loans are available in most parts of the United States.

Via Fred Chamberlin – Eugene/Springfield’s #1 Experienced FHA Mortgage Consultant:

The USDA Rural Guaranteed Loan Program is an exceptional vehicle for first time home buyers who often times have trouble coming up with the down payment. The credit crunch keeps some home buyers sidelined because of credit problems, many others with good or adequate credit are able to purchase real estate and get best deals in years, including mortgage programs with no down payment like this! Large portions of Lane County qualify for this program.

This loan program is available right now for Florence, Veneta, Junction City, Cottage Grove, Creswell, Oakridge, Westfir, Swiss Home and Pleasant Hill. The credit guidelines are quite liberal and more people can qualify that may think they can.

To qualify for the program (it is income limited), a family of four cannot have a total household income of more than $70,750 per year. That is a pretty liberal guideline. After Jan. 1, a family of 1-4 qualifies with the same income. Larger families have much higher income limits.

If you are interested in property in this area and would like to see if the address falls within the USDA “footprint” click here.

So – THE TIME IS RIGHT!  We have many properties on the market, we have MONEY TO LEND, and the Federal Government is giving First Time Homebuyers a $7500 tax credit if they purchase prior to next summer!

Visit Fred for more information on USDA mortgage loans in Lane County, and to see if your household income qualifies for this NO PMI (private mortgage insurance) loan check this link.