Boy I've read some of the articles bashing Lawrence Yun, the NAR's economic guru, and some of it wasn't pretty. Oh well, when you put yourself our front like that you're subject to both praise, I didn't hear any, and criticism, he got plenty of that.
The postings and bashing did make me think though, and that's a good thing. I live and work in Southwest Florida, Lee County, and do I, or don't I, think our market's improved, based on Lawrence's big 3.
That would be sales price, sales volume, and foreclosures.
Let me start with the obvious;
Comparing 2008, yuck, yuck, yuck, to 2009 is a no brainer! Did our market improve in 2009.
Absolutely!
Big Time!
Before I start, I'm not sure what Lawrence's cred's are, but mine consist of the following;
I have over 25 years in the mortgage lending arena. I have lived in Southwest Florida for over 15 of those years. I have a B.A. from the University of New Hampshire with a Major in Political Science and a Minor in Business Administration.
Expert? No. Idiot? No. (some may disagree there)
Will our prices increase 4% in 2010?
I believe that they will. They will be driven by the single family detached dwellings. The buyers will be purchasing homes as primary residences, second homes, and investment properties. Actually I think there is a capacity for a more substantial increase, but I believe this will not occur as Condominium sales and foreclosures will continue to hold us back to a certain degree.
Will sales volume increase 15%?
I can't see that!
Our numbers are strong, even comparing them to our record years, I believe. The only way I can see that type of increase over 2009 would require a recovery in Condominium sales and that is not going to happen for awhile, in my opinion. There's little if any Condo financing available, and what is available doesn't offer favorable terms.
Will Foreclosures peak in the first half of 2010?
Check out Debbie Cullen's post on Lis Pendens, and if the numbers hold, then they already have. For many Realtors here this may actually be an area of concern, as the foreclosures have contributed to our inventory, and low prices, and removing them from the market should/will slow things down a bit. Add this to why I don't think sales volume will increase.
That would fall in the we're happy for the existing homeowners, but it will effect our sales.
I mean I'm a loan officer with over 25 years of experience and some of this terminology throws me for a loop.
To me the question to ask if you hear that a loan is
"clear to close"
is when will the closing package be sent out.
If there is dead silence or a long pause, prepare yourself. You're probably about to receive an explanation as to what else needs to be done. If that involves any conditions involving something needing to be done by the buyer than I'm reaching the conclusion that it's not really
"clear to close"
at least not as I would expect any normal, non underwriting, or closing department person, to determine the meaning of "clear to close" to be.
The next step involves an individuals definition of "clear to close." Does it mean that a closing package is being prepared for the signatures of the buyer and seller, or does it involve the ability to be funded? That's a whole different discussion.
To me I think it's safe to say that when you're told a loan is "clear to close" that it has cleared the underwriter and is headed to the closing department, but it might actually mean it's "clear to close."
It's kind of interesting, to a certain degree, that the house that you can purchase today for $100,000 once sold, or could have sold 2,3, or 5 years ago for $250,000. It's really great that you don't have to pay that for the house, because maybe you couldn't or wouldn't have tried to buy it. But in regards to what it might have been worth previously as compared to what you can buy it for today;
It just really doesn't matter!
All that matters is today's value.
To the seller;
You paid $250,000 for a home 2,3,or 5 years ago and it isn't worth more than $100,000 today and you really must sell it today. Yes I will concede, particuarly if you are selling short, that the difference has some relevance, but that fact alone doesn't change what the value of the home is today, the market does. So when it comes to what it is worth today, what you paid for it really;
It just really doesn't matter!
To the mortgage holder;
Whether you acquired the property through foreclosure, or are considering a short sale, and originally the property sold for $250,000 and you accepted a $250,000 mortgage, you foolish creatures. In regards to the value of the property today;
It just really doesn't matter!
The point here, that I am attempting to make, is that all that matters in regards to the value of the property today is what is the actual value of the property today, supported by comperable sales, today's comperable sales.
When it comes to the historical value of the property and its relationship to what it is worth today.
Well I started looking for a home, and my Realtor told me I had to be preapproved. Since Pre means before I took it to mean I had to be checked out before I was to be approved, which as it was explained to me would take place after I signed a contract to purchase. I gave them my social security number, birthdate, paystubs, and bank statements, and in return I was given this really nice letter saying I had been preapproved for x amount of money for a mortgage.
Best I could figure the preapproval was a license to shop.
Okay, good start, let's go looking.
I found a house, made an offer, and it was accepted.
What now?
I met the loan officer, nice person, signed about 60 pages worth of documents, forked over some more personal and financial data, and went home to wait.
What next?
I was contacted by a person called a processor, who requested additional information. I really didn't think I had any additional information, but she found some. I forked over $$$ for an appraisal, and sat back and relaxed.
They couldn't possibly want any additional information, could they?
The processor called in about 2 weeks and told me that my file had been reviewed by the underwriter, and I was approved, with conditions. When I reviewed the conditions I came to the conclusion that the underwriter was a very creative human being who had somehow found some more information, which they just had to have. I sent in the information and the underwriter signed off on the conditions.
That means I'm approved right?
Well kinda, the file is going to the closing department and I'm told that we have some closing conditons. We can close when we satisfy these conditions.
Everyone involved is assuring me that I'm approved, but I don't feel approved.
The Va Loan Program for eligible Veterans is just flat out a great program and a wonderful opportunity for qualified Veterans and;
They EARNED it!
I mean we're talking about
100% financing with no monthly MI
Here's some of the requirements;
181 days of active duty during peacetime
90 days of active duty during wartime
6 years in the reserves or National Guard
spouse of a service member killed in the line of duty
Other Veterans may qualify under special circumstances such as being discharged early due to a service related diasability.
Funding fee;
This is a one time upfront charge, traditionally financed with the loan.
2.15% on 100% financing for the first use
3.3% for 100% financing on second or subsequent uses
1.5% for up to 90% financing
1.25% for 90% financing or less
a higher rate applies to reservists and National Guard eligible Veterans
Traditionally we would not see a Veteran making a downpayment, however in today's world with either the total lack of conventional financing below 80% loan to value or high MI premiums, this option should be considered for those wishing to make a downpayment on a home.
Exempt;
In most cases a Veteran will be exempt from the funding fee under the following circumstances;
service connected disability
those who would qualify for disability status, but do not receive disability due to receiving retirement pay
surviving spouses
Income and Credit qualifying;
This is an earned benefit and the Veteran's Administration wants the Veteran to be able to use their entitlement. But they do not want to put a Veteran in a bad position right from the start. As with ALL loans in todays market the lenders have their own point of view. Remember
the Veterans Administration Guarantees the loan they do not Fund the loan!
That being said the guidelines are more relaxed than for most other financing options.
Credit for the last 12 months carries the most weight.
the income ratio is 41%, but may be expanded with compensating factors
the VA also uses a residual income formula, a 120% residual ratio is a HUGE factor towards approval.
The residual formula, in it's simplist form, is based on what's left for monthly income after all the bills are paid. The VA has standards based on family size.
WHY?
First, it's the right thing to do! there should not be any limit to what we will do to support and thank OUR Veterans.
Second, it WILL generate more sales, and that's our job.
Never, never , never forget how a Veteran acquired their eligibility.
This is notto be consideredto be an all encompassing, what you need to do before and/or after buying your first home, but more of a food for thought type of thing.
First Lesson;
Think, about what you are about to do!
Sounds obvious, doesn't it. Well tell me then, why is it when I ask a potential first time homebuyer what they will feel comfortable with for a monthly payment, usually there is silence? Not always, but usually. I assume this means that they haven't given it any thought, or at least not enough thought.
Downpayment;
You don't have to use all of your available funds to close the transaction. Cash reserves are very important to your success. If you don't have any, then you need to start developing some immediately.
House Fund;
Develop a specific account just for your new home. As a renter, when there was a problem, you called your landlord and requested/demanded it be fixed immediately. Now you need to dail your own number and talk to yourself about it. This isn't a case of will something need immediate attention, BUT when will it happen. The house fund is solely for the house.
Residual Income;
This is what's left after you have paid ALL of your bills and expenses, your fun money. Will you have any? money? fun? Will you be living and working solely to support your home? Is this acceptable to you? I refer you to section 1, entitled "think about what you are about to do."
Savings;
Do you have any? Do you need any? If you need help on the last question, the answer is yes. Do you remember years back when one of the chic expressions was "shit happens." While I don't hear that any more but it's still true.
Your fixed rate payment is not fixed!
If your payment consists of principle, interest, taxes, and insurance in all likelihood the payment will increase annually. The principle and interest will always be the same, but the taxes and insurance may increase.
All I'm trying to suggest here is that you be prepared and go into the transaction with your eyes wide open. Align yourself with a Realtor and Loan Officer who are experienced with first time homebuyers. Feel free to ask a lot of questions.
There is no such thing as a stupid question!
Each individual and couple are different and have their own needs/wants. Make sure yours are being met. This post is not meant to answer all questions, just to make you think a little. After all, these are just
That's about as much truth as you're going to hear for awhile. I have been expressing this opinion to Realtors and buyers for quite awhile. And if you are trying to evaluate a lender's behavior by using common sense criteria then I have a piece of advise for you;
STOP!
common sense (from webster); good sense or practical judgement
There you have it, that's not us!
We look like we have taken a step back into the past. We look that way because;
We have.
Here's a little "common sense" application as to why.
We were loosy, goosy for 5-6 years. I believe the approval process involved having a pulse. Yes, that's it. If you had one you could have a loan. I believe that it might have been, that even if you didn't, you might get a loan anyway.
Even if you had never paid anyone back, at anytime in your life, you could still have a loan.
And for some reason we thought we might get paid back. Why we thought that, I'm not sure.
Well that didn't make any sense.
So now we regressed into a more traditional mode of lending behavior. An adjustment needs to be made by all.
If we know that more paperwork will be requested, and we know that all the inspections will be, well inspected, we need to prepare or clients for the experience.
As Realtors, YOU are my client!
Beware, as you already are, that we will require more paperwork.
My promise to you is that I will work hard in your behalf, that I have been a mortgage lender for 25+ years and have been down this road before. I will be truthful with you, no BS. I will attempt to make the process as easy as possible for both you, and my other client, the buyer. Let me add, and this is extremely important.
A good, experienced, knowledgable, hard working L.O. is vital to your success today!
But, one thing I can't change.
I'm a mortgage lender and I don't have any "common sense!"
I just got my fall copy of "The Guaranteed Eagle," the Official News of the SFH Guaranteed Loan Division of USDA/Rural Development. The cover letter says it all.
Check it out! See how much the guaranteed loan production has grown this year making FY 2009 the
Best Year Ever!
It goes on further to say;
Thank You
for assisting 6,652 FL/VI families with $842,402,865.34 of Rural Development guaranteed loans this year.
My first thought is,
You're welcome!
Even at the ripe age of 57 my parents teachings still rule, so to me you're welcome is appropriate/necessary.
My second thought is;
Wow! what great numbers.
Maybe we don't need alot of new programs and giveaways, maybe all we need to do is make the best use possible of programs already in place.
Interesting thought, huh.
Nationwide;
The Single Family Housing Guaranteed Loan Program increased volume over 111% and dollars obligated increased over 132%.
Here's a great quote, coming from a government agency.
"Rural Development wishes to thank all of our lending and real estate partners for supporting the Guaranteed Loan Program. We are proud to partner with you to offer stable, affordable, and reasonable loansto create more successful homeowners."
Well right back at Ya!
I'm just one man, and I don't have any right or authority to speak for our industry, but I ask you all to join me in thanking those who worked so diligently at a time, that we needed it the most.
Hat's off to all those working at USDA/RD for a job well done.
Okay I've checked the maps, and I visited the website, and I just can't find any part of Collier County which is not eligible. They do have a specific list of county's with ineligible areas and Collier County is not on the list. This does go to prove something that I have been continuing to stress;
Rural Housing is available wherever the USDA says it is, it has nothing to do with RURAL areas!
Naples, Marco, Immokalee, Golden Gate-go for it!
So what's the benefit to perspective Collier County Buyers;
100% financing-no downpayment required
Closing costs can be paid by the seller or financed when supported by an appraisal
No first time homebuyer requirement
No FHA 90 day seasoning
No monthly Mortgage Insurance-MI
These are not all the benefits, and USDA/RD offers very competitive 30 year fixed rate mortgages.
You're thinking there must be some restrictions. Well you're right. The two most important, in my mind are;
The property must be a single family owner occupied primary residence.
While there is no value restriction, there are income restrictions.
For a family of 1-4 members the guideline states the income should not exceed $81,450.
For a family of 5-8 members the guideline states the income should not exceed $107,500.
These incomes can be adjusted based on particular family expenses.
So, for those potential buyers in Collier County I need to know.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
