FOR THE REAL ESTATE PROFESSIONAL

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For the Real Estate Professional

This site is dedicated to informing the Real Estate Professional. I Blog each Friday, to keep you informed of upcoming changes, statistics, rates and lending news.  There is also links to program brochures on the right, as well as charts and news to keep informed.

Mortgage rates improve & recasting a mortgage

In this Blog:
* Turkey & Mortgage Rates
* Bad Loan Approval Letters
* Recasting a Loan
* Appraisal Waivers

Mortgage Rates


We saw a pretty nice improvement in rates this week, as expected, with all eyes focused on Turkey and their potential collapse.  Although this is being fueled by Trump and Tariffs, it brings to light the underlying economy of Turkey and their troubles since they switched from a Parliamentary government to a Dictatorship.

Turkey is on holiday all next week, so we shouldn’t get any information that would influence bonds until 08/27.  With that being said, watch out for Trump Tweets with regards to the Pastor being held in Turkey.  Yep, Tweets about a Pastor will actually influence our mortgage rates…who would of thunk.

Also, yesterday, the stock market rallied 400 points, as the US and China indicated that they are going to start talking again.  Typically, we would of see rates worsen with that much of a jump in stocks, but we were pretty flat.  Which indicates that stocks are optimistic, but bond traders are not.

Next week is a pretty lame week, we are going to get some housing numbers, but no one is paying attention to them right now, even though we are seeing signs of slowing.  I would be floating next week, as we have seen rates drop from the high 4’s to the mid 4’s.  Could we go lower.

Technically, there is quite a bit of resistance for us to go much lower, mortgage rates/bonds have broken through two pretty good resistance levels, and today we could break that tough 100 day moving average, but we have a 102.00 level this is REALLY tough.


Auto Approval Loan Letters

Have you seen them yet, some lender/banks/credit unions are issuing loan approval letters that are automatically generated.  Which means, a borrower goes online, inputs their data, and the computer will then automatically pull credit and other data, and automatically issues a loan approval letter, without a human ever being involved.

The risk is HUGE at that point in time.  Someday we will get to a point where through the BlockChain we will be able to review, instantly, a borrower’s ability to borrow.  But until that time comes, there are just too many variables with income, bank statements, tax returns and credit reports to give a loan approval letter without a full review.

Just FYI, our policy is that we review a full application, credit report, paycheck stubs, tax returns and bank statement before we issue a loan approval letter.  And honestly, it takes us 30 minutes to 1 hour to do that, so it really does not take that long.
When in doubt, call the loan officers!
Recasting a Home Loan

This has come up quite a bit, Recasting a loan.  What is it you might ask, here we go….

If a borrower purchases a home for $300,000 and get a loan for $250,000, but in a couple of years down the road, they come into some money, or maybe sell another property, and net and additional $100,000, borrower may want to put that money towards their existing home loan.

LOTS of lender will gladly do that, in the way of a refinance and having them bring that $100,000 in at closing.  Why would they do that, because they will make money on the refinance AND re-amortize the loan to a new 30-year loan, thus paying more interest upfront.

BUT, a borrower should ask if the loan can be recast.

In this situation, the borrower will fill out a couple of pieces of paperwork, wire the $100,000 to the lender, plus $300 processing fee (roughly each lender is a little different on the fee, but all of my lenders are <$500), and the lender will then apply the $100K to existing loan and adjust their payment for the remaining of the term of the loan.  So, if the borrowers did a recast and they have 28 years left on the loan, the lender would reduce their payment to those 28 years.

Recasts can only be one 1x, and the lump sum has to be a large amount, each lender is a little different on this.  This benefits the borrowers by saving them TONS OF MONEY when compared to a refinance…take that big banks and credit unions!


Appraisal Waiver

I am getting more and more questions about appraisal waivers and some lenders/credit unions telling agents that they do not exist.  Appraisal Waivers DO EXIST.

If you have a solid borrower, say 720+ FICO and 20% down, the odds of your clients getting an appraisal waiver is quite high.

Benefits of the appraisal waivers:
* Closing significant faster.
* Save Borrower $550+
* No appraisal politics, re-inspections.

ALWAYS ask the lender if they received an appraisal waiver, and if they do, why didn’t they honor it?


Canary in the Coal Mine?

This week, I saw a local builder offering a HUGE concession to purchase one of their homes….what!!!!

Why would anyone in this market offering concessions.  That is a great question, it can’t be rates, rates have dropped in recent months, and it can’t be lending, with all of the non-prime loans, and lender accepting FHA & VA down to 500, we pretty much can get anyone qualified.  So, what is it?

I did a little research and call a few professionals, and it is coming down to affordability.  Home prices have risen so much, that entry level buyers cannot afford homes.  Just this week IMLS data showed that from July 2017 to July 2018, Ada Count home prices rose 18.2% and Canyon County Prices rose 24.3%.  And I can guarantee you, during that same time period, wages did not increase at that same rate.

The Median home price in Ada is $319,000 and for Canyon it is $229,945.  That means for a single borrower to afford a home in Canyon County, assuming a conventional, 3% down loan, they would have to earn $20.15 per hour, full time, 40 hours per week, and have no other debts.

Now the sky isn’t falling, and don’t circle the wagons, but this is defiantly something to watch.

Posted by 375loan at 8/18/2018 12:54:00 AM

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