Jim's Blog

$100 Down Homes-FHA!!!!

Jim Alroth (Real Estate Resource Home Loans) — Tue, 26 May 2009 16:41:59 -0700

In one of the best kept secrets in real estate today, you can buy a home for only $100 down! Loan programs also allow up to $5,000 in repair costs. What's the catch? Actually there isn't one except they are only available for HUD owned homes.

These homes can be viewed on HUD.Gov. You can also contact a local Realtor who is hud approved. Most of these homes are in need of repair and can also be used in conjunction with the FHA 203(k) program. The 203(k) loan allows up to $35,000 ($31,500 with a 10% continent's) for non major repairs.

With home proces at bargain prices, rates near historic lows and a $8,000 tax credit, buyers will be says I should have bought in 2009 for years to come.

FHA Kidde Loan Program

Jim Alroth (Real Estate Resource Home Loans) — Fri, 27 Jun 2008 17:40:45 -0700

In a tough real estate market, you need to look at any avenue to increase revenue. An often overlooked program is the FHA Kiddie Condo Loan. Despite what the name says, it does not only apply to condos.

Every year parents send their kids off to college. With rising cost for housing it may make sense to buy a home near school. With the glut in the market another avenue may open for sales.

A summary of the program is below:

A great way for young adults to start buying their first home or for a college student. The FHA "Kiddie Condo" loan program allows a blood relative (eg parent, grandparent, sibling, etc.) to help qualify for the loan using their income and assets. Both borrowers take title to he property and sign for the loan.

There are three major advantages to this loan.

1)Low down payment (as low as 3%)

2)A lower interest rate versus a non owners occupied property.

3)Helps the new borrower establish credit.

With the Kiddie Condo loan program, at least one borrower must occupy the property as his/her primary residence, but extra bedrooms can be rented out to help cover the costs of the mortgage payments. A perfect program for a college student, recent graduate or anyone unable to obtain a loan on there own home without the help of a family member. Please note the property does not have to be a condo. Condo projects so have to be approved in advance. The tax benefits of the mortgage interest and taxes can be deducted. Please consult your tax adviser.

Apply for your Kiddie Condo Loan today!

FHA Changes

Jim Alroth (Real Estate Resource Home Loans) — Tue, 17 Jun 2008 16:36:00 -0700

Within the next month FHA will change to a risk pay lending format like both Fannie Mae and Freddy Mac have done. The changes raise both the front end mortgage insurance premium and the monthly. For borrowers with good credit and higher LTV will have rates and premium decrease. For most the rates will increase.

Tha changes are as follows.

Let's take a closer look at the ten primary changes to the FHA guidelines:

1. Borrowers with either no score or at least 500 may get an LTV >90%
2. Borrowers with a score less than 500 get a maximum LTV of 90%.
3. Borrowers without scores will require manual underwriting.
4. Upfront Mortgage Insurance Premiums will range from 1.25% to 2.25%, depending on score.
5. The Monthly Mortgage Insurance will range from .50% to .55% depending on score.
6. The premium is based on the borrower with the lowest score.
7. If one of the borrowers has no score, then the Non-Traditional credit grade is used.
8. Credit rescoring is allowed to improve a borrower's credit grade.
9. All FHA Secure refinances >95% LTV with delinquencies have a 2.25% UFMIP and .55% MMI.
10. Along with purchases, these changes apply to cash-out, rate & term, and non-delinquent FHA Secure refinances.

The only constant is change.

Bargians??

Jim Alroth (Real Estate Resource Home Loans) — Fri, 06 Jun 2008 11:05:47 -0700

Are foreclosures bargains? No question they can be but they are not easy to close. As more and more foreclosures are stacking up, lenders are overburdened. Dealing with the asset managers can be a long drawn out processes. Recently I had two deals go away because the asset manager had not responded to an offer for over two months. In both cases the buyer ended up resigning a lease. Lesson learned.

Problems with the foreclosure market include getting utilities turned on, inspections down, repairs made and countless other problems. The seller agents have so many listing and have a difficult time getting responses to offers.

What can you do? Have your clients make an offer on a property that has already received an offer. The bank has gone through their process and will move much easier. It is possible to close these within 30-45 days. Otherwise expect 60-120 days.

Hope this helps

Buy Low Sell High

Jim Alroth (Real Estate Resource Home Loans) — Fri, 30 Nov 2007 16:18:20 -0800

Buy low, sell high is one of the most basic fundamental of investing. We all look back and kick ourselves on why didn't we buy that Microsoft stock. Why didn't we invest in company XYZ when it was cheap. Instead people jump on band wagons like Enron.

This also defines today's real estate market. For the last five years home prices rose and rose. More and more people jumped on the bandwagon Prices rose out of sight and lending standards lowered. This year the bubble burst. There is record inventory and prices have dropped.

Which brings us to our current state. Given the large inventory and long days on the market, there are many bargains on the market. For renters and even the trade up buyers, it is time to buy low. First time home buyers can find seller concessions and low prices. Trade up buyers may have to grant those concessions but will save even more on the trade up.

Our job as professionals is to advise our clients that this is a great market, not a bad one. I realize it is a challenge but not as tough as the first stock brokers who recommended a company started by college drop outs.

Mortgage Meltdown Truth

Jim Alroth (Real Estate Resource Home Loans) — Tue, 04 Sep 2007 16:03:34 -0700

The Truth About the Mortgage Market

By Jim Alroth
Real Estate Resource Home Loans

Subprime mortgages have now been credited for bankrupting well over 110 lenders and seriously damaging operations at many major mortgage firms. They've reportedly wiped out 5 hedge funds, tens of thousands of jobs, and have led to millions of foreclosures with millions more on the way. And, as if that weren't enough, subprime mortgages are also blamed for massive volatility in the stock, bond, credit, futures, and real estate markets here in the US and around the globe. Some say losses in the mortgage securities market alone could reach hundreds of billions of dollars this year.

This means that, for any Americans looking to buy, sell, or refinance a home, they are confronting a very different market from the one that existed just 6-12 months ago.

How did this happen?
The recent real estate boom was fueled by a period of record home appreciation and historically low interest rates. Banks, in order to compete, loosened guidelines and began offering more funding to more borrowers through riskier, non-conforming or "exotic" mortgages.

These ideal lending conditions persisted for several years, supported by high demand, historical real estate data, home prices, and massive trading volume/profits on mortgage-backed securities and other financial instruments on Wall Street.

Then, in 2006, a slowdown in real estate led to a deterioration of home values, an increase in inventories, and ultimately to today's tightening of credit guidelines, leaving many investors unable to sell or refinance out of their existing positions. Many Americans who had tapped into their equity were suddenly tapped-out and overextended as home values fell. Foreclosures followed in record numbers and a re-valuation of mortgage bonds and other financial instruments created the credit/liquidity domino effect we're now experiencing.

Unfortunately, it's going to get a lot worse before it gets better. According to the latest estimates, over 2 million subprime and Alt-A adjustable rate mortgage (ARM) holders will face payment increases of up to 30%-100% when their loans reset in the next 2 to 18 months. These loans make up less than 40% of the total mortgage market, but the negative effects, as we have seen, of increased foreclosure activity can have a ripple effect throughout the industry and around the globe.

What does this mean to you and your mortgage?

Sellers: If you're planning on selling your home, be prepared for an even smaller pool of qualified buyers. While some experts predict a settling of this credit crisis over the coming year, tightened credit guidelines and diminishing mortgage products could knock out as many as 15%-30% of potential qualified buyers. Now is not the time to sit and wait for the best possible price. Have a serious talk with your real estate agent. Having experienced buying/selling transactions in your area, he or she can help you price your home accordingly. He or she can also help ensure that your buyers are pre-approved and stay pre-approved throughout the entire transaction.

Buyers: Get pre-approved by your mortgage professional. While there are a lot of great deals out there, getting credit is becoming tougher and tougher, and it's taking longer and longer to complete a transaction. Remember, what you qualify for today could change tomorrow in a volatile market. For those looking to refinance, keep this in mind. There is no time to delay! Communicate with your lender. Don't do anything that could negatively affect your credit, and make sure you get all your documentation in on time.

ARMs Borrowers: If your ARM is scheduled to reset in the next 2-18 months, you need to schedule an appointment with a mortgage professional right away. Whether your ARM is subprime, Alt-A, or even if you have a pre-payment penalty, don't let a default or foreclosure situation sneak up on you. Did you know that your monthly payments can increase anywhere from 30% to 100% once your loan resets? At the very least, give yourself the peace of mind of knowing what your adjusted payment will be.

Borrowers with less-than-perfect credit: Each week it seems lenders are shedding more and more mortgage products. Many lenders have stopped offering No-Doc loans and are reducing all forms of Stated-Income loans. While it might be challenging, borrowers with credit issues need to see a loan expert. Often they have credit repair resources and other strategies to help you reach your financial goals.

Finally, there's an important concept to embrace: all markets, while cyclical in nature, are self-correcting, be it credit, real estate, stocks, or bonds. For the last 6 or 7 years, real estate was booming and riding high. The correction we're experiencing now - while it seems harsh and could get much worse - is, in a sense, "natural" and directly related to the extremely loose guidelines and perhaps overzealous lending and leveraging during the boom cycle.

Home Ownership Makes Sense

Jim Alroth (Real Estate Resource Home Loans) — Fri, 10 Aug 2007 13:41:50 -0700

A Qualified Mortgage Consultant Can Outline Your Options

Renters Have Much to Gain by Pursuing Home Ownership

Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages. Even with this market they are great investments.

Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you're helping them make their mortgage payment.

The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won't benefit when the property value goes up!

However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down. If you purchase a $100,000 property 100% financed, in five years you will have roughly $16,000 in appreciation and equity assuming only 3% per annum growth.

In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.

To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.

There are many different types of loan programs available, including "low" and "no" down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income. Some programs allow gift funds from not for profit and with todays market many sellers are offering to pay closing costs.

Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that "home" is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.