E-Signature
As we are signing more and more Real Estate Documents via eSign technology, lenders are requiring proof of eSign Documentation. And more and more people do not know what we are talking about.
In order for a eSign document to be legit, it must follow very specific guidelines in order to validate the signature.
A person can’t just type their name using Adobe Acrobat or some other PDF editor. Due to the fact that this means anyone can “sign” the document.
Also, there is specific guidelines on record retention, and how to prove the person whose signature appears on the record really signed that record.
More information can be found here: https://www.fdic.gov/regulations/compliance/manual/10/X-3.1.pdf
And please research how you will pull the eSignature Verification Certification, because lenders will be asking for it.
Is there a bubble coming?
Nope, but we are going to see a slowdown, not because of supply and demand, but because of affordability.
According to Freddie Mac’s latest numbers, home prices have increased by 76% between 2000 and 2016, while income, per capita, has only increased by 72%. So, that means that incomes have not kept up with home prices.
Here in Idaho, let’s take Ada County, according to the Idaho Department of Labor, the Average wage in 2005 was $36,774, and in 2015 the average wage was $45,210, which is roughly a 22% increase. Or average of 2.2% per year.
But average home prices, since December 2011 have gone from $139,000 to $215,000 in March 2017, according to Zillow’s stats. This is an increase of roughly 55%, take that by 5 years and 3 months = 10% roughly increase per year.
So if income is only increased by 2.2% per year, and home prices are increasing by 10% per year, something has got to give, and that is affordability, i.e. less people will be able to afford homes in Idaho.
Now my fuzzy math doesn’t account for all of those out of state people coming into Idaho, so that is why we do not see a bubble, but a slowdown. And who does this hurt, well the entry level builders are going to be the first to feel the effects, and they it will trickle up. Home prices will have to start to slow down and maybe plateau, until wages catch up.
And the stats are catching up, Zillow reports that home prices rose 7.3% in 2016 for ADA, but for 2017, they are estimating only a 3.3% increase…plateau coming?
Long Locks
1st Choice Mortgage is proud to announce that we are offer longer locks for those new construction loans!
Previously we could only offer 120 day locks, but now we can do 120, 150, 180 and up to 270 or 9 month locks. This is pretty AWESOME, especially with the era of higher interest rates coming up.
- Eligible Properties are: Single Family, duplexes, and 4 plexes.
- Eligible Borrowers are: Primary residence, 2nd homes, Vacation Homes, and Investors
- Eligible Loan: Conventional, FHA, VA, Rural Development, Conventional High Balance, FHA/VA high balance, and some portfolio products.
- There is a “Float Down” option, so 30 days before the home closes, if the interest rate has actually gone down, we will float the borrower down!!!
- Fees, NOPE, NO APR FEES!
- Deposit, YES, but the deposit is credit back to the borrower at closing towards their Down Payment or Closing costs.
Call us today for complete details and guidelines, link to flyer CLICK HERE!
Coming SOON!
Contraction to Permanent Loans, for those buyers that have private builders that do not have financing available, we will roll out the Construction to Perm loans, so the buyer completes all of the financing and when the construction is complete, we turn it into a permanent loan.
More details to come!!!
Rates
As indicated last week, the honeymoon with Wall Street is over for the President. There is some growing concern that Trump will not be able to get his tax reform through Congress. Thus, investors are not putting their money into the stock market and are turning to more safe havens such as bonds.
So, in the last couple of weeks we have seen mortgage rate settle back down to the low 4’s, and government rates settle into that 3.75% ish range.
All of the latest economic news, employment, consumer sentiment, consumer spending has been hugely positive, and should be moving rates higher. Plus, we received inflation numbers today, and inflation is definitely here, that should be moving rates higher as well. But for the here and now, all eyes are on the President and Health Care and Tax Reform.
Lock those loans, it will only take 1 Federal Reserve member to indicate that they are going to start lowering the Fed’s Balance sheet OR some Tax Reform Success from the President, and we will see those mortgage rates spike back up to the 4.50% in no time.
Clearly defined trading channel, stuck between the 50 & 100 day moving average:
