The last couple of years have seen the elimination of most of the zero down payment options for home buyers.  While there are a few options left,  questions of who qualifies and how to get a home when you have no down payment have been the most asked questions.

Recently, we have rolled out a Zero Down Home Loan for first time home buyers in Idaho.  The general requirements are:

     Must not have owned a home in the last 3 years.

     The borrowers must have a fico score of at least 680

     The combined debt to income ratio must not exceed 45%

     The borrowers must contribute at least $1000 to the transaction.

Now there are other qualifying that must be done, but those are the main qualifications.

This program doesn't require private mortgage insurance, making it very affordable.

When compared against the often used FHA program with secondary financing and required mortgage insurance premium, it came in much lower monthly payment.

So if you're a First Time Home Buyer in Idaho, and you have questions on how to qualify for this program, call me at 208-861-7579.

With the rush of new home buyers to get a home under contract by the Home Buyer Tax Credit deadline of April 30th, many home buyers may have put off working on their mortgage. 

First of all, its decision time.  Have you been pondering what sort of loan to get?  Conventional, FHA, Rural Development are all different types of loans with different features and requirements.  Your mortgage professional should have presented them to you with a recommendation for the best one for your situation. 

If you have multiple choices, pick one now and get moving. 
The deadline for closing those Home Buyer Tax Credit purchases is June 30th.  Many lenders are seeing their loan submission increase, and its creating longer turn times.  If you are under 45 days from the deadline, you need a lender who can move fast.  More importantly, you need to provide what ever they ask for asap.  As we approach the June 30th deadline, expect the escrow companies to get backed up as well.

The Home Buyer Tax Credit has created a wonderful opportunity for home buyers, don't let it get away because you waited too  long.

As of January 1st in 2010, a new Good Faith Estimate  form will be required.  It is intended to help the consumer better shop for a loan.   The new form will be three pages vs the one page form currently in use.

It will require loan originators to bundle "origination costs" in one figure, credit any rebate to the borrower, and guarantee the charges for no less than 10 days.

On the surface, it sounds good.  Testing by Hud has shown otherwise.  It will take a well educated originator to accurately explain the new 3 page good faith estimate so that the client can make an educated decision.

One of my biggest concerns with the new 2010 good faith estimate is that there is no place to count seller paid closing costs in a purchase transactions.  Furthermore, it requires us to quote the owner's title insurance policy as a buyer's cost.  In most cases, the seller pays this title insurance.  Finally, there is no "cash required to close" line on the 2010 good faith estimate.  That's a pretty important item and I don't think most buyers will be satisfied with a simple "the sellers going to pay these costs.

In the next year, we will also be looking at a new Truth in Lending Statement.   If the Consumer Finance Protection Agency gets voted into law, then expect them to put their own disclousres together and scrap the 2010 good faith estimate and 2010 truth in lending statement.  This is going to cause even more confusion and possible expensive mistakes for borrowers.

Once again, the key to avoiding the confusion and possibly making an expensive mistake is to choose an experienced and educated loan officer.

That nice young person in the bank might be conveniently located in your bank, but does he/she have the experience and education to properly explain the new regulations?

For those that say the Mortgage Brokers days are numbered,  I strongly disagree.  We will be needed  more than ever.

With the deadline for the tax credit approaching, I have heard all sorts of rumors and untruths regarding its extension and expansion.  I even saw an article from a well know personal finance magazine that suggested that the buyer only had to be under contract by Nov. 30Th to claim the tax credit.  One look at the IRS web site told differently.  The point is, we're hoping for this to be extended or expanded and some of us will delude ourselves or others that it has already happened.

To extend this, congress has to agree to it and set the terms.  Right now, the climate in Washington is less than perfect for this as they are all fighting on how best to take over the health care industry.  As a result our industry concerns; HVCC, Seller funded DPAs, and the first time home buyer tax credit have all been pushed aside.  Yes, some in Congress have brought this issue up, but until recently, its been lost in the shuffle.

Yesterday there was some action on the much hoped for extension of the first time home buyer tax credit.  The Senate voted to extend the tax credit until April 30Th of 2010.  They also clarified that you just have to be in contract by then, and have a further 60days to close.  They also provided for a move up buyer tax credit of $6500 for homeowners who have lived at their present homes 5 years or more. 

This extension/revision of the first time home buyer tax credit is attached to an unemployment insurance bill, so it should get through, but you never know.  The House still has to approve it and any differences reconciled by committee.  I wouldn't expect the president to veto it.   I'll believe it when I see it.

In the meantime, I'm cautioning everyone who makes application that lenders are not promsing to close on or before the 30th of next month, so be advised. 

Here in Idaho, the First Time Home Buyer Tax Credit program has been a God send.  It has stimulated Idaho home sales over last year and I'm sure its kept plenty of Idaho Real Estate Professionals in business.

Even though the First Time Home Buyer Tax Credit is not new, I still get many questions regarding the program.  when it first started, we had few resources to call on.  I recently found the official IRS site and form that I have been forwarding to all my Idaho First Time Home Buyers.

The links are http://www.irs.gov/pub/irs-pdf/f5405.pdf  (the form)

and http://www.irs.gov/newsroom/article/0,,id=206291,00.html  (the guidelines)

Remember, the home must be occupied by November 30th to be eligible for the First Time Home Buyer Tax Credit program.  For those who are building a home in Idaho, it might be getting too late to take advantage of the program if you don't finish and occupy the property by then.

Hopefully, Congress will extend the tax credit when they get back in session.

Some details are emerging on the changes that will probably happen to the FHA HECM (reverse mortgage) program.

Both the House of Representatives and the Senate have bills in front of them to cover the requested 798 million dollar subsidy that the program will require. 

The House bill doesn't provide any funds to subsidize the HECM program(reverse mortgage), while the Senate bill reportedly covers only 200 million of the subsidy and requires HUD to reduce the available loans by 5% loan to value.

There are alternate suggestions by NRMLA to adjust the mortgage insurance premiums to cover the shortfall, but it remains to be seen if that will be included in the bill.

Right now, there is an effort by some in congress to kill the program or at least make it even more regulated.  Some such as Sen. McCaskill, are making the outrageous claim that reverse mortgages are the next subprime.  When challenged by the media for her to produce specific instances where there was abuse of the program, she could not.  It will take take vigilance on the part of the industry to see that such misinformation is not allowed to go unchallenged. 

In the meantime, the need for the FHA HECM is expected to grow as more baby boomers are reaching retirement and find they don't have the funds to cover their needs.  By making minor adjustments, we can ensure that the program remains viable and a useful tool for our growing senior population.

Bottom line is if you are considering a Reverse Mortgage or know someone who is, they should move quickly before Congress reduces the program.

As always, I can be reached for information at 208-861-7579.  To receive a quick quote on your reverse mortgage scenario, go to: http://www.fastidahohomeloans.com/forms/reverseMortgage.html 

Warning, this post has nothing much to do about real estate or mortgages!

One of the things I love about my job is that I can take time off whenever I want.  Back in my w2'd slave days, I had to beg to take my 2 weeks of vacation and God forbid that I asked for it off over a holiday.

This most recent vacation was a camping trip to Glacier National Park.  We had never been and were totally blown away by the magnificent scenery, the wildlife, and just how fast one could forget the outside world.

(Never mind the date stamp, I forgot to reset it after changing the camera's batteries)

While it was hot back home, we enjoyed the cool mountain air.

Anyway, this has nothing to do with Real Estate, although I did pick up a few RE Guides for Kalispel and the Flathead Lake area.  I just wanted to share a few photos of a true national treasure, Glacier National Park.

Maybe tomorrow I can remember how to take a loan application!

I have gotten several clients in the last few weeks who are without a credit score and think they cannot get financed.  Furthermore, there is a certain radio talk show host who brags about haven a "zero fico score".  I expect to see more of this, so here's how to get financed if you don't have a score.

We collect the information on your alternative creditors such as the water, power, gas, and telephone companies and get them to report your payment history to the credit bureaus.

We also get the information from your landlord and get it to report as well.

When we have 4 sources that will verify that you've paid on time for the last 12 months, we can ususaly get a lender to accept your loans applications.

Now, here's some misconceptions about using alternative credit.

    Alternative Creditcannot be used to offset bad credit.  So say you have some unpaid bills and they have gone into collection and they show up on your credit report, you  cannot use Alternative Credit.  At that point, you need to establish some traditional credit and wait for it to establish a credit score for you.

    The rate you receive may not be the same as someone who has established traditional credit.  It runs as much as .375% higher to use non traditional credit at some lenders.

    Your loan will not process as fast without traditional credit scores.  You cannot get an automated approval without credit scores.  Furthermore, it takes a few days to collect the information and get the credit reports to report your Alternative Credit.

Alternative Credit can be useful for those who are not using the system, but wish to purchase a home.  Just be prepared for a little bit more work and possible higher rate.  If you want a list of acceptable sources of Alternative Credit, just email me.

The new Mortgage Disclosure Improvement Act (MDIA)of 2009 goes into effect today.  It is designed to prevent borrowers from getting incorrect information at application and then being surprised at closing with un expected and undisclosed fees.  the main provisions of the act are:

    No fees other than a credit report fee may be charged up front.

    An appraisal fee cannot be charged for 3 days after receiving a good faith estimate and Truth in Lending Statement(TIL).

    A mandatory 7 day waiting period is required for the borrower to examine the fees.

    If the Annual Percentage Rate changes by more than .125%, a new disclosure is required and a 3 day waiting period is required.  The law also requires 3 business days for mailing the new Truth in Lending Statement.

This is supposed to keep the borrower from being surprised by unscrupulous lenders who will low ball a good faith estimate in order to get the loan, but then charge what ever they feel like at close.  Many times borrowers have felt pressured to go ahead and sign when they should have gotten up at closing, and refused to sign until they got a good explanation of the charges.

It has been hard competing with unethical lenders, usually out of state or online only, who do this.  I think the small waiting period is more than worth the protection it offers borrowers.

As a loan officer, i struggle many days to fit everything into my 9-5 world.  Sometimes there's jsut too many tasks to fit and I have to prioritize.  I break my tasks down into those which are high payoff, low payoff, can be delegated, and cant/shouldn't be delegated.  From there, I set each days schedule.

As salespeople, our high payoff activities are prospecting, working our presentations or appointments, and following up with leads and people we have presented to.  Other tasks, such as status updates, paperwork, and scheduling closings are low payoff activities and should be delegated to our processors, assistants, or transaction coordinators.

I'm at my best in the morning, so I try to set my prospecting time then.  Its kind of like excercise in that if the days gets going before you do it, something will come up that gets in the way, so do it first.  If its 30 minutes, an hour, or 2 hours, schedule it and don't let anything interfere with it. 

The next most important, high payoff activity is actually selling.  Those appointments and presentations lead to applications.  The actual setting up of the loan file is actually an important, but low payoff activity that I do, but I'm considering handing that off to an assistant when volume warrants it.

Finally, the last high payoff activity is following up.  Many sales people fall short in this task.  They call the lead, leave messages, maybe follow up a second time and if there's no response, they give up.  Do you know that most sales happen after the 5th contact?  You need to have a systematized follow up to convert those leads that don't immediately become your client.  Where do think next months and next years business is coming from?

Other activities such as status updates can be accomplished with a quick email early in the morning.  My processor can answer my questions with minimal intrusions into her work flow.  Other tasks such as call backs can be grouped into a block of time for better efficiencies.  As long as you get to them the same day, you'll be fine.  I set aside 2 blocks of time for call backs, one in the morning after prospecting and appointments, and the other towards the end of the afternoon after the afternoon appointments.  similarly, emails can be used effectively for things such as program questions and loan scenarios.

By prioritizing your activities and scheduling them, you can go home knowing that you've done all the important task that are vital to your business.