Author Archive

Home equity reaches all time high

October 8, 2019

The amount of equity in US homes now exceeds the levels seen before the housing crash. Available equity in the US is just over $6 trillion, which is 25% higher than the peaks seen during the housing boom.

Black Knight Inc uses data and analytics to provide forecasts for the mortgage and real estate industries. Their surveys indicate just over half of home owners have rates at 0.750% or higher than current rates. The average home owner has $140,000 in equity in their homes.

Meaning… homeowners have enough equity to avoid PMI (or get rid of PMI if currently on their loan) and lower their monthly payment by moving to a better interest rate.

With rates at yearly lows, and lots of equity in homes, it is the right environment for a refinance. So… should you refinance?

The main question I ask clients is “how much longer do you plan to remain in the home?”

  • If the homeowner is looking to move in the near future, then it rarely makes sense to refinance.
  • If the monthly savings begins to exceed $100 per month and a break-even point is around 2-3 years, then a refinances begins to make more sense.

Another question I get is “when should I consider refinancing?” It is a great question, and my answer is simple… if the current interest rate is 0.500% or higher than your rate, then at least have a conversation.

Own a home in Georgia and your interest rate is at or over 4.500%? Wondering if now is a good time to refinance? Contact me today. In just a few minutes, we’ll put together some numbers to see if a refinance could make sense. A credit pull isn’t required for this conversation.

Mortgage rates are as low as they’ve been in a couple of years. There is more equity than ever in US homes. If you are planning on remaining in your home for 2+ years, now may be a great time for a refinance.

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Planning the move

September 10, 2019

At The Mortgage Blog, we talk often about making a plan for the mortgage. Today, let’s talk about a different type of plan – the move itself!

It makes perfect sense. I mean, we make plans to ensure the home loan goes smoothly. There is a plan for the home we look to buy (area of town, school districts, size of home, size of yard, etc.). I mean, why wouldn’t we tackle moving with the same concepts.

So here’s to planning the move! Where to begin? Let’s begin the same way we begin a home search, with a plan. Just like you’d sort potential homes by number of beds, baths, etc., let’s begin sorting our possessions into categories such as:

  • clothes
  • kitchen items
  • plates
  • glasses
  • decorative items
  • toys
  • important documents
  • toiletries
  • books

Looking at an entire house full of items is overwhelming. Sorting through each category becomes more manageable. With the categories in place, it makes the next step of sorting easier.

Once everything is sorted, it becomes obvious what to do with all of the possessions. Reviewing each category separately, you can begin to see what items you want to keep, what items to sell/donate/give away, and what items simply need to be recycled or thrown away.

The final step is to begin packing as soon as you are able to do so. Planning a summer move? Well, you don’t need winter clothes in the spring. Pack them up! Use the same logic for other items you don’t need access to all of the time. By getting a head start on packing, it will lessen the burden when it comes to packing up the entire house.

Still overwhelmed? Packing and organizing just isn’t your thing? No worries! Lots of people don’t like this stuff. If you want to consult a professional, how about Amber Blandford with Joyful Spaces. Amber owns and operates the professional organizing services provided by Joyful Spaces. When some people run screaming in fear of organizing, Amber feels a rush of joy! She’ll help you get going!

So there are some thoughts on planning a move. Still need to plan on how to pay for the home purchase? I’m always happy to help! Contact me today. If buying in the state of Georgia, I can get you prequalified in a few minutes and have you well on your way to making an offer on your new home!

More potential changes to FHA loans

August 6, 2019

I’ve thrown up a posts over the past couple of months (here and here) about potential changes for condo purchases using FHA loans. How about a change on FHA loans that is beneficial for everyone!

A new bill working its way through Congress would make mortgage insurance for FHA more like mortgage insurance for conventional loans.

Currently, FHA mortgage insurance is permanent unless the buyer makes a 10% down payment. When making a down payment as large as 10%, often buyers use a conventional loan. Maybe there is a case where someone still wants to do an FHA loan (for example, a foreclosure 3 years ago is OK on FHA loans but not OK for conventional loans), but often 10% down means a buyer is using a conventional loan for their purchase.

With FHA’s current permanent monthly mortgage insurance, it makes FHA loans much less competitive with conventional loans. The new bill looks to change this situation.

If passed, the bill would change the cancellation date on FHA mortgage insurance from “until the loan is paid in full” (meaning permanent for the life of the loan) to when the loan balance is 78% of the homes original value. Meaning, the mortgage insurance is no longer permanent.

The current set up with mortgage insurance on FHA loans really isn’t fair to the home buyer. They are way over charged paying mortgage insurance for the life of the loan, and the change could make FHA loans are more viable alternative for buyers making the minimum down payment on a home purchase.

Can’t decide if an FHA is right for you? Contact me and we’ll find out! If you are buying a home in the state of Georgia, I can also get you prequalified and ready to make an offer on your new home.

Flood insurance program extended

August 1, 2019

Not many people seem to agree on anything in D.C. right now, but there is one thing receiving praise from the National Association of Home Builders (NAHB) and National Association of Realtors (NAR) – flood insurance.

Democrats and Republicans worked together to reauthorize flood insurance through most of 2024. The NAR President praised the bipartisan agreement to provide some stability for national flood insurance for years to come. A strong flood insurance program helps stabilize the housing market and provide affordable housing in areas at a higher risk of flood damage.

It wasn’t that long ago some people thought the flood insurance program wouldn’t receive more funding, and now we have five years authorized – an eternity in politics these days!

Flood insurance isn’t just for the coasts. Sure we think of places like Savannah, Charleston, and New Orleans, but there are plenty of places in the metro Atlanta area in flood zones. Without this program, large areas of residential homes in the US would be at risk causing a housing shortage and creating more issues in the housing market (especially when it comes to affordability).

A job well done on a program impacting millions of families in the U.S.

The mysterious case of home ownership

July 9, 2019

Home buyers continue to make assumptions (most of which are bad) when it comes to buying a home. Meaning, the options for education for buying a home are not as good as they should be.

That is why you have The Mortgage Blog!

This misinformation is undoubtedly holding some back from even looking to try and purchase a home. Let’s take a look at a recent survey by Fannie Mae to see some of the false assumptions buyers have about purchasing a home:

  • most buyers assume the minimum credit score is higher than what is actually required to qualify
  • most buyers assume the down payment is higher than what is actually required as a minimum down payment
  • few home buyers are aware of low down payment programs such as Fannie Mae Home Ready requiring only 3% down

Under these assumptions, many potential buyers assume home ownership isn’t even an option and therefor do not do any further investigating into possibilities of buying a home.

The Mortgage Blog has covered all of these topics and more:

The Mortgage Blog has your back! Reading over these, one will learn a large down payment is not needed to buy a home (as little as 3% down on a conventional loan and 3.5% on an FHA loan), perfect credit is not required (down to 620 on FHA and conventional and sometimes as low as 580 on FHA), and there are programs out there for first time home buyers.

Been wanting to own a home but confused at all of the misinformation out there? Just want a straight answer or two? Contact me! I will be happy to answer your questions about home ownership. If you are looking to buy in the state of Georgia, I can get you prequalified and on your way to owning a home!

Changes coming to Home Ready

July 2, 2019

Fannie Mae has a great loan product called Home Ready. Potential home buyers can qualify even if not a first time home buyer. The blog covered the details of Home Ready in the past. Check out those posts:

One aspect to pay attention to is the income limit. To qualify for Home Ready, a potential buyer’s income can’t exceed 100% of the area median income (AMI) for the area. There are also some areas with no income limits. These areas are determined from the census track (where household income and people are counted in geographic areas).

Here is a handy website where one can look up a property to see about qualifying income limits:

https://homeready-eligibility.fanniemae.com/homeready/

Starting July 20, 2019, Fannie Mae will implement changes to the program. Gone are the no income limit areas. Another change is the qualifying income reduces from 100% of the AMI to 80%. What does this mean:

  • some metro Atlanta areas have no income limits, so a buyer could have an income of $200,000 and still use Home Ready. After July 20th, that will no longer be the case.
  • If an AMI is $80,000, the qualifying income will be now $64,000 (80% of the AMI) instead of the $80,000.

It seems Home Ready is narrowing the pool of potential buyers who can use the program. If you are looking to use Home Ready, talk to your loan officer to see if these changes could impact your home search.

Looking to buy in the state of Georgia, if so, contact me today. We can get you ready to make an offer on a new home in minutes, and see if Home Ready is a program you could take advantage of with your home purchase.

Interest rates move lower

June 18, 2019

Interest rates/Mortgage rates (same thing) moved to a two year low earlier in the month. While rates have since rose a bit, they are much lower than the start of the year.

Rates are well over a half point better since the start of the year. This decrease is beneficial for two reasons. First, it is helpful for those out looking to buy a home right now. Let’s say someone was looking to get a loan for $250,000. With the improvement in rates, a buyer can now get a loan for $265,000 and have the same payment. More buying power!

The other is for existing home owners. The Chief Economist at Freddie Mac said with rates dipping below 4%, “there are over $2 trillion of outstanding residential loans eligible to be refinanced – meaning the majority of what was originated in 2018 is now eligible”

So… should I refinance? A couple of questions you can ask yourself:

  1. Did I purchase a home in 2018? If yes, then rates are definitely lower than when you bought. It would be worth looking into what a new payment could be with a lower rate.
  2. Are current 30 year fixed rates of at/below 4% better than a half a point or more than your current rate? If yes, then it is worth looking at the numbers.
  3. Considering taking some equity out for a home project? I am working with several clients doing a cash out refinance. With the drop in rates, these clients are getting a lower rate, cash out for home maintenance, and keeping a similar payment to what they are making now.

Do you fit into any of those questions? If yes, it might be time to review the numbers for a potential refinance. If you are a homeowner in the state of Georgia, contact me today! In a short phone call, we can decide if the time is right for a refinance. If rates aren’t low enough for it to make sense, we can set a target rate and I’ll contact you when rates move lower. It is that easy. If nothing else, it is worth inquiring to make sure you don’t miss out on this drop in mortgage rates!

FHA still looking to revise condo guidelines

June 13, 2019

A post earlier this year on The Mortgage Blog detailed some of the potential changes coming from the Federal Housing Administration for using FHA loans when purchasing condos. As with most things involving the government, they still haven’t finalized the details, but the final product is coming more into focus.

The FHA Commissioner stated the agency is currently working to revise its condominium approval rules and that he expects a final rule to be announced soon. These changes on condos are paramount has he called condos a “mainstay of affordable housing” for seniors citizens and first-time buyers.

With that in mind, here are some of the proposed changes:

  • allow owner-occupancy determinations on a case-by-case basis.
  • allow up to 45% of commercial space in a building without documentation.
  • increase the approval period from two years to five years (this would be amazing since condo complexes are seemingly always in a “get approved with FHA mode” since they only last two years).
  • still the possibility of allowing for spot approvals.

The goal for FHA loans and condos is the become more flexible, less prescriptive and more reflective of the current market than existing guidelines.

While these changes will be welcome, it is hard to get too excited. The FHA issued proposed changes to its condo rules in 2016 that promised to lift a number of restrictions and streamline the certification process, but it has yet to issue a final rule. 

If these can go into effect, it would be perfect for buyers with lower down payments and/or below average credit scores. While one can qualify to buy condo with 3% down using a conventional loan, the rate for someone with below average credit scores is 1% or more higher than doing an FHA loan. This would make condos more affordable to more buyers.

Looking to buy a condo around the Atlanta BeltLine? Maybe a live/work/play area with condos over businesses? Or perhaps just a good old fashioned high rise condo complex? If you are looking to buy a condo in Georgia, contact me today. We’ll get you ready to move into your new home in no time at all!

Differences between conventional loans

June 6, 2019

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Fannie Mae and Freddie Mac offer conventional loans. Their guidelines are almost completely identical, yet there are some unique differences that can come in handy under the right circumstances.

Here are some differences between Fannie and Freddie:

Freddie Mac:

  • Often only requires one bank statement (Fannie requires the two most recent bank statements).
  • When doing a refinance, the borrower can take the greater of 1% of the loan amount or $2,000. If the loan is $400,000, then the borrower could get up to $4,000 back and not be a cash out refinance (Fannie Mae has a $2,000 limit).
  • Employed by a family member? Only one year of tax returns are required (Fannie Mae requires 2 years).
  • Student loans in deferment have a payment calculated by taking 0.5% of the total balance (Fannie Mae is 1% of the balance).
  • Self employed buyers only need one year of tax returns if the business is over 5 years old. If less than 5 years, then two years are required (requirements for Fannie Mae are not as straight forward as Freddie Mac*).

Fannie Mae:

  • Higher likelihood of getting a Property Inspection Waiver using a Fannie Mae conventional loan.
  • If a buyer has a second job that loses money as shown on a filed tax return, the loss can be ignored with Fannie Mae so long as the job is not in the same line of work as their primary job (Freddie Mac counts all income losses from tax returns).
  • Student Loan Cash Out – a homeowner can do a cash out refinance to pay off student loans without taking the interest rate increase from doing a cash out refinance.
  • DACA recipients eligible to purchase a home with a Fannie Mae conventional loan (Freddie Mac does not allow DACA buyers).
  • Normally requires fewer months of reserves than Freddie Mac.

spot-the-difference-worksheets-pandaNext time you apply for a home loan and look to do a conventional loan, you may not think it matters if it is a Freddie Mac or Fannie Mae loan. As you just read, choosing Fannie or Freddie under the right situation can make all the difference in the world. That’s why you want to work with a Loan Officer who is aware of these small differences.

Looking to get prequalified for a home purchase in the state of Georgia? If yes, contact me today.  I’ll ask very specific questions about your situation and make sure the correct conventional loan product is chosen.

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*With Fannie Mae, self employed buyers may only need 1 year of tax returns regardless of how long the business has been open. The default is two years of tax returns, but could be one year under the right circumstance (low debt to income ratio, high down payment, excellent credit, etc.). 

Still cheaper to own than rent

May 21, 2019

The trend continues – especially in Atlanta – it is cheaper to own than rent.

With the latest housing push over the past few years, homebuyers have fared better than those who continue to rent. In the recent CoreLogic report:

  • On average, renters tend to be more cost-burdened than homeowners
  • Across the US, monthly rents continue to rise.
  • Home loan payments and associated home ownership costs are lower.

Another stat from the study shows the rental index is up 36% from during the during the housing boom through today, yet home loan payments are down just shy of 5% over the same time period. The study looked at twelve metro areas. On average the rent increases ranged from 20-60% while reporting a drop in the home loan payments anywhere from 3-24%. Lastly, these are sound loans being issued today. With a combination of income growth during the economic recovery, home values appreciating, and sound underwriting guidelines, delinquency rates are lower than they’ve been in decades.

So what is preventing potential buyers from purchasing a home? Often it is misinformation. Too many people feel you must have 20% down to purchase a home (one can buy with as little as 3% down), perfect credit (loan approval can be obtained with a score as low as 620), and no debt (debt to income ratios can be as high as 50% for conventional loans and 55% on FHA loans). This is simply not true. Owing a home with a small down payment, below average credit, and other debt is easier than most imagine.

Contact me today. If the home you are looking to buy a home in the state of Georgia, you can be ready to purchase in as little as a 10 minute phone call. We can also start the process online. It can be that easy!