While you may have heard discussions in the media about the decline of property values in many markets, that is not the case in Austin, Texas.  Home prices in recent months have increased and in many instances, there are multiple offers presented to the seller, resulting in homes selling within the first few days of being listed.  When supply is rapidly decreasing and demand is quickly increasing, prices have only one place to go – and that is UP!

With Interest Rates at historical lows, it is time to stop paying your landlords mortgage and start building your home equity.

To help answer this question I have added a How Long Must I Wait page in our Answers section which describes the policies for new Conventional, FHA, and VA loans.  If you are in this situation and would like additional information about your personal situation, please contact us at Pulse Funding.  We are here to help.

To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets.

In order to expedite the paperwork process, start gathering the following items:

• Most recent paystubs for one month.
• W2s from the last two years.
• Signed copies of your last two years’ tax returns, including all schedules that were filed.
• Homeowner’s insurance company name and number.
• Most recent bank statements for two months.
• Most recent statements from any retirement and investment accounts for two months.

What costs are involved?

Within 3 days of your application, your Loan Officer must provide you with a good faith estimate of closing costs. Along with any down payment, you will have to pay closing costs at your closing as well. This is a brief rundown of some of the fees that could be associated with your new mortgage:

• Application/Processing Fee – Charged by the loan officer to process your loan application.
• Appraisal Fee – Charged by the appraiser to determine the current value of the property.
• Closing Fee – Charged by the closing agency (escrow, attorney, title) to ensure the close of your transaction.
• Credit Report Fee – Charged by the credit reporting agency to provide your credit report to your loan officer and/or lender.
• Title Search/Title Insurance Fees – Charged by the title company to ensure the property is free from liens or title defects.
• Origination Fee – Paid to the originator to obtain a lower interest rate. This is usually expressed in the form of points. One point equals 1% of the loan amount.
• Discount Points – Paid to the lender to secure a lower interest rate.
• Miscellaneous Fees – VA and FHA loans may have other fees associated with them. Private Mortgage Insurance (PMI), document preparation, notary, recording and tax service are other fees which may fall under this category.

Let us help you evaluate your personal situation and assist you in finding the loan program that works best to meet your individual goals and needs.

In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.

Upgrades can usually be expressed at full value in newer homes since they required investing additional money onto the cost of building the home. On the other hand, the amount invested in upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.

These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a “real time” appraisal.

Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.

As a loan advisor, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions.

If you have an upcoming closing that involves a loan in Texas, the Lender who is making the new loan will require all property taxes to be collected and paid at the time of closing.

Typically, these taxes can be paid one of two ways:

1)    Property taxes can be withheld from the owner’s funds at the time of closing,
OR
(2)     Funds can be disbursed from the existing owner’s escrow account currently set up to service the property.

Occasionally, there may be a delay from the time the existing Lender disburses the funds from the existing escrow account to the point at which taxes can be verified as “paid” by the taxing authority.  If the title company unable to obtain a tax certificate from the tax service confirming that taxes are paid in full at the time of closing, then they will be required to collect these taxes from you, the current owner, at closing.  Unfortunately, paid receipts from the property tax office, escrow account disbursement statements or letters from your Lender confirming the disbursement of taxes from your escrow account will not be adequate proof of payment.  The Title Company must have a Tax Certificate which indicates that taxes have been “Paid” prior to closing.

This can be a very confusing issue, so please feel free to contact us with any questions you may have with regard to property taxes or any other title matter.

We all know that lending had to change, greed took over and the rest is history. Making a loan to a buyer without the proper documentation to prove their willingness and ability to repay a loan was, and is wrong. But, making a borrower jump over hurdles that don’t equate to anything more than making a underwriter (lender) feel good is just as wrong.

Politicians have decided that this is a political free-for-all to gain votes, lenders keep adding more and more restrictions because they cannot sell the loan to the two major GSE’s. How ironic that the GSEs were created by congress and congress is the body that loosed the underwriting guidelines for the very loans that created the financial crises that our country endured.

Total housing inventory dipped slightly in 2010, as did the number of weeks the home remained on the market.

Home prices are expected to bottom-out in 2011, which means that if you are thinking of purchasing a home, you need to take action NOW! With low interest rates and a strong inventory, 2011 is shaping up to be a buyers market.

The Annual Mortgage Insurance Premiums is the mortgage insurance that is included in your payment (1/12th), the Upfront Mortgage Insurance Premium is the amount that is added to your loan amount.

Currently, the annual premium for 30-year mortgages, with Loan-to-Value’s (LTV) over 95% is 90 bps, as of April 18, 2011, this will increase to 115 bps.  LTV’s below 95% will increase from 85 bps to 110 bps on 30 year mortgges.

15 year mortgage’s will also be hit with the increase. Currently LTV’s less than 90% have no annual mortgage insurance, but not so after April 18th, add 25 bps to your payment, and over 90% LTV will increase from 25 bps to 50 bps.

So what does all this mean? Higher mortgage payments!  This is the second increase in Annual Mortgage Insurance Premiums in less than 1 year. October 1, 2010, HUD raised the premium from 55 bps on 30 year fixed rate mortgages to 90 bps on LTV’s over 95%.

If you are looking to purchase or refinance with FHA financing and have been sitting on the fence waiting for home prices to drop, you may want to re-consider, and have a case number assigned (appraisal ordered) before 4/18/2011. Your monthly payment on a FHA 30 year loan with 3.5% down, will go up a little more than $41.00 per month on a purchase price of $200,000.

Even with all the regulations that have been placed on the mortgage industry, I am still amazed at the lack of ethics with Loan Officers quoting interest rates to “rate shoppers”.  Now, I am all for trying to get the best deal, but unfortunately what happens to rate shoppers is they don’t get the best deal and don’t realize it until interest rates have gone up (which in some cases is within hours of the initial quote) or worse yet, they get down to closing and are told they need to bring in thousands of dollars more than they had expected.

Far too often we receive phone calls from borrowers who think they have all the answers that any Loan Officer needs to quote an interest rate, because they have shopped around, they know what questions will be asked.  They are quoted an interest rate and how much it will cost. The only problem is the rate they were quoted is only for a 10 day lock, and the loan can’t close in 10 days.  Or worse yet, quoted an interest rate that really doesn’t exist for the price (origination fee, discount points). Why, because the Loan Officer want’s the deal and hopes that rates are volitile enough to drop to the rate and price quoted before the loan closes.

So if it sounds to good to be true, it probably is. We all get our rates from the same place, the “secondary market”. Yes, some lenders will pad the price more that others, but unless the lender is trying to fill a commitment, rarely will you see the price lower for a given interest rate.

What borrower’s should be shopping for is experience and service. By experience, I mean experience of the Loan Officer.  How much experience? Do they educate themselves on the ever changing underwriting guidelines? Are they licensed through the NMLS? Do they ask questions to find out what your financial goals are? If any of the answers are NO, then run, don’t walk to and experienced Loan Officer.