Here is a video that gives some important information about this credit, information that I hadn't really thought about until recently. Because I know that I hadn't thought about it, I feel it very important to share this information with any and all potential buyers - they really don't have much time remaining!  If you, a friend, a client, a family member, or someone you work with is still on the fence about buying, you need to send this to them@

Click here to see the video and share with anybody you know that is contemplating on buying a home but is still undecided and hasn't yet put an offer on a house!!!!

I am being interviewed for a podcast that will be on iTunes this coming week and the subject is "What Makes a Loan Officer a Success".  Having pondered this, I have concluded that two traits are needed: knowledge and involvement.

While trying not to appear demeaning, all of us can market, learn to market, or hire someone to do our marketing for us.  However, unless and until we know what it is that we are marketing, even the best marketer will be scrambling to make their car payment or keep their cell phone on!

In these days of ever-changing guidelines, it is imperative that we, as loan officers, learn those guidelines, relearn those guidelines, study them and commit as much of them as possible to memory and then keep up on the changes as they happen.  Several months ago, I took a Friday, Saturday and Sunday and spent them holed up in a hotel room going over and over my investor's guidelines and the mortgage insurance guidelines (I'm in Florida, which is a market that has different rules than other states in many cases.)  Doing this, while somewhat boring at first, showed me so much more that we CAN do as opposed to what we can't do.  My object wasn't to find out anything other than what limitations the different investors we work with and the MI companies were placing on us but I found ways to get loans done that I didn't realize even existed!  It's amazing how many people will say that they are "loan officers" or "mortgage consultants, advisors, or experts" only to find out that they really don't know how to get a loan closed from beginning to end.  They may not know all of the correct documents that are needed for the underwriter and have to keep going to the client and asking for more, which is extremely unprofessional and frustrating to the client, they may not know the maximum loan to value or debt to income ratio or minimum credit score needed, and they may just throw answers out to appear knowledgeable that, in the end, makes them look as unknowledgeable as they really are.  It is better to respond to a question with either (a) the right answer that you know because you study your guidelines continuously or (b) an "I am not 100% sure but I will check on it and get right back to you" than it is to every try to appear that you "know your stuff" and throw out an incorrect answer!

The second trait needed is INVOLVEMENT.  All the knowledge in the world won't help unless and until you have someone to share it with.  As a loan officer, the best place to start spreading that knowledge is with Realtors®.  I have found that being involved in my local association through committees and sponsorships, being an active member of the local chapter of Women's Council of Realtors, and being involved in community and/or charitable organizations allows me to share my knowledge when questions are asked that tell the other party that I know what I am talking about.  If a Realtor® asks me a question and I just give an answer to "appear" knowledgeable and then it turns out that my answer is wrong, I wouldn't expect to do business with that Realtor® again, and rightfully so.  Even worse, they will probably tell other Realtors® and then your reputation will be sullied going forward.  When you are at functions for your Board or other organization functions, DO NOT MAKE IT ALL ABOUT YOU OR YOUR COMPANY!  Being involved means doing the task that is required of that committee or group and it isn't about self-promotion!  It is through these efforts, however, that you establish relationships and some of the other people in these groups may ask you questions and if you give the right answers, they may then refer you business.  Nobody "owes" any of us their business; it is up to us to "earn" it.

My creed is and always has been: "If I help you to grow your business, it will then, in turn, help me to grow mine".  The key to doing this is patience and making sure that in any and all answers in conversations you have with the Realtor, borrower, title company, etc. is one that you don't just make up to look like you're smart.   In my head, the "smart" person I picture is Einstein........if you prove you're no Einstein, you will also find you're no Trump or Gates, either!

I have been getting a LOT of calls about financing condos in our area and throughout the Southeast.  At this point, we have been told that if any of the following are present, the project is considered a "condotel": 

• If an underwriter can Google the name of the project and the city and finds that they can rent a unit for a short term there (ie: a day or a week), they are considering that project a condotel; 
• If the project has the word "Resort", "Inn", "Hotel" or "Motel" in the legal name, it is being considered a condotel; 
• If a project offers maid or concierge services, it is being considered a condotel; 
• If a project has an on-site rental desk, it will be looked at as being a condotel. 

Please keep in mind that a project only has to have ONE of the above characteristics in order to be considered a condotel, not all of them!  Do you know of more than a handful of projects in the Destin/Panama City Beach/Ft. Walton Beach market that do NOT have one or more of these characteristics??!! 

Here at Northstar Mortgage Group, we are very aware of the frustrations you, as Realtors, are dealing with in getting buyers financed for condo projects in our local market and we have found solutions for you and for your buyers.  We have made efforts to find portfolio lenders (lenders who won't sell the mortgages on the secondary market) and have come up with some that can offer the following financing for condotels: 

• Second home financing on 3, 5, 10 year ARMs or 10 and 15 year fixed rate mortgages with 25% down; 
• Investment financing on 3, 5, 10 year ARMs or 10 and 15 year fixed rate mortgages with 35% down; 
• Up to 100% financing as second home or investment property with additional collateral (lendable equity in other property owned; we can put as many as 4 properties on one mortgage to accomplish this).   We would need to speak with the buyer to determine if they have "lendable equity" and determine the maximum loan to value based on other property that they own to determine if this is an option for them. 

If the project has either or both of the following features, the down payment required will be 45% but we can still do financing: 

• Less than 750 square feet (excluding balcony) and/or 
• Doesn't have a full kitchen (must have full size refrigerator, full size stove/oven and full size sink). 

If any one or more of the following features are in the project, we can not do financing except with special exception for low loan to value and/or if additional collateral is pledged: 

• Managed by national hotel chain;  
• Owners are REQUIRED to participate in a rental pool; 
• Homeowner's Association is controlled by the developer and not the unit owners; 
• Project has timeshare or fractional ownership units in it. 

If you are leery of listing a condo unit because you are unsure of the available financing, please feel free to call us and see if we will be able to help with any prospective buyer.  If you have a buyer and feel as if you are beating your head against the wall with the financing, please feel free to call us, as well! 

The investors we are using do have a maximum exposure that they will do in each project and we have a list of projects that they are already maxed in and can help you before you write an offer/take a listing to make sure we can do financing in a particular project.  Feel free to call me to find out if you have a listing or a buyer to make sure we can do the project they are buying/selling. 

Please do not hesitate to contact me with any questions or to have your buyers contact us for financing on condotels!  We can finance condotels in Florida, Alabama, Georgia, North Carolina and South Carolina.

On Monday, April 20, USDA Rural Housing income limits were increased.  Here are our local limits and, if you are located elsewhere, just email me and I can tell you the limits in your area. 

Okaloosa County: 

If there are 1-4 persons in the household, maximum income is $76,250 and if there are 5-8 persons in the household, maximum income is $100,650 

Escambia, Santa Rosa, Holmes, Bay and Walton Counties: 

If there are 1-4 persons in the household, maximum income is $73,600 and if there are 5-8 persons in the household, maximum income is $97,150. 

This is a great tool to allow prospects who were sitting on the fence to purchase now and close before December 1, 2009 and take advantage of the $8,000 tax credit.  How many buyers do you have that would love to finance 100% of the sales price PLUS ANY CLOSING COSTS THAT THE SELLER ISN'T PAYING AND/OR THEIR PREPAIDS??!! 

Did you know that the funding fee for the USDA loan is also tax deductible??  (It works on a VA and FHA loan, too!)

Don't hesitate to contact me - we can help you get to closing!!!

USDA Rural Development has confirmed that the proposed change in the income limit structure for the USDA Guranteed Rural Housing Program will be implemented as planned on April 20^th!  This will allow a lot more people to qualify for one of the only 100% financing programs left, and certainly one of the only ones that allows you to include closing costs in the mortgage (if supported by the appraisal)!

In summary, the current income limit structure that is based on household incomes will be restricted as follows: 

Okaloosa County:

Household of 1-4 persons in it: Max Gross Income of $72,650

Household of 5-8 persons in it: Max Gross Income of $95,900

Walton County/Bay County/Santa Rosa County/Escambia County:

Household of 1-4 persons in it: Max Gross Income of $70,750

Household of 5-8 persons in it: Max Gross Income of $93,400 

We cannot submit any loans with these increased income limits to USDA until April 20 but we can take applications and get the file processed prior to that date.  This should be a huge boost to our market as more people will be able to purchase with absolutely no money down!!!!!

Contact me and let's get you or your client prequalified and closed with NO MONEY DOWN!!

I attended a class the other day called "10 Things to Ask Your Buyers Before Taking Them House/Condo Hunting" and will be addressing those issues in an upcoming blog entry but wanted to put together a list of what can kill a deal for a buyer or a seller.  Please feel free to share this information with your buyers and sellers!

1. Skipping the Mortgage Preapproval Process: For buyers, getting preapproved for a mortgage gives them a clear idea of how much they can safely borrow, plus it addresses credit issues and kick-starts other financial paperwork.  What's more: it identifies them as a SERIOUS BUYER.  With mortgage guidelines changing almost daily these days, a buyer needs to be 100% sure that they can afford the down payment requirements and meet the credit score requirements of a particular property type.  Sellers with a hot property should demand nothing less than proof of preapproval from the potential buyer's lender (hopefully it's Northstar Mortgage!)  There is no sense in wasting time on time wasters!  I know most Realtors require their clients to get preapproved prior to ever showing them the first house but I also know Realtors who spend sometimes months showing prospective clients properties, taking them to lunch and/or dinner, searching the MLS for them and then find out that the client cannot get approved for a mortgage at all!  On top of having spent countless time with an unqualified prospect, the Realtor has also spent money on them.  IF A CLIENT IS UNWILLING TO GET PREAPPROVED, HOW SERIOUS CAN THEY POSSIBLY BE??

 

 

2. Not Knowing What a Condotel is: As Fannie Mae, Freddie Mac, FHA and VA tighten up their credit guidelines, they have basically choked the ability to do a fixed rate mortgage for a condo in a resort area.  If you have a client that is buying a condo and you can go on Google, put the name of the project and the city in, and find that you can rent a unit in the project for a day or for a week, chances are you seller will NOT be able to get a fixed rate mortgage to buy a unit in that project as it will be considered a "condotel" or "condohotel".  If the HOA has 10% - 15% (depending on the investor) or more of the units in the project as delinquent on their dues, it makes the financing in that project even that much more difficult.  If the project has the word "Resort" in the legal name of the project, it is a condotel.  Here in our local market in the Panhandle, one or all of these affects about 99.9% of the condo projects!  Before you show condo units to a prospective client, MAKE SURE THEY ARE AWARE THAT THE AVAILABILITY OF A FIXED RATE MORTGAGE IS ALMOST NON-EXISTENT!  While we are able to finance condotels with several investors utilizing adjustable rate mortgages, you would be very surprised at how many calls A DAY I get from clients who are at contract on a unit and then find out that they can't get a fixed rate mortgage.  You would be doubly surprised at how many of them end up not buying at all!  (It's currently noon as I am writing this and I have already had 5 of these calls today and in all cases: they were at contract and talking about not buying.) The investors we use do NOT require a condo checklist so it's sort of a "don't ask, don't tell" policy on the HOA dues.  If your client knows up front that they can get a mortgage and the type and terms of the mortgage, they are more apt to buy a unit as opposed to finding out after they find the perfect unit.  The prices and deals on condos right now are so incredibly good that some people don't care that they have to do an ARM but if they find out after the fact, it sours them and causes them to take pause and possibly not buy!

 

 

3. Not Understanding the Length of the Buying/Selling/Financing Process: I have no idea what the numbers are, but there is a high percentage of real estate being sold that is either a short sale and/or REO that have to be approved by the bank currently holding the note.  This process can take as little as 3 weeks or as long as 3 months (and even longer) and sometimes, buyers lose their enthusiasm.  Make sure your client knows going in that buying one of these properties (or selling one, if you are the listing agent) will not happen overnight.  If they know up front, it doesn't create a fear in the buyer or seller because it takes longer than they may have expected.  On the financing side: because rates have dropped to almost historical lows, most underwriters are taking more time to get files underwritten than what it used to take.  Talk to your loan officer and get a realistic idea of how long it may take (I have heard of some underwriters taking 5 to 6 WEEKS to underwrite files based only on the sheer magnitude of the number that they have received recently!!!)

 

 

4. Assuming the Appraisal Equals the Actual Value: In theory, appraisals are objective estimates of value.  But several different appraisals can yield several different numbers.  For example: an appraisal that's been done for a possible refinance may have been slightly inflated to encourage that refinance.  So make sure that, as sellers, when a house is put on the market the agent do a CMA to better indicate the home's worth.  As a buyer, get similar comps from your agent!  But realize that the TRUE VALUE of a property is what someone is willing to pay for it.  There is no emotional value added to an appraisal.

 

 

5. Exposing Your Hand During Negotiations: Buyers should never let their love for a house cloud their vision.  They need to try to contain their enthusiasm.  Otherwise, the sellers and/or their agent will know they've hooked a live one and assume you may forgive certain flaws because they think a particular property is right for them.  Also, I always suggest to my clients that when they make an offer on a home that they tell me the amount and I will send a preapproval for that exact amount.  If a client is preapproved for $200,000 but is offering $179,000 for a house that is listed at $190,000, they are giving the seller an unfair advantage in knowing that they can afford more!

 

 

6. Opting to Use An Agent That is a Friend of a Friend or a Family Member (aka: choosing the wrong agent):  Buyers and sellers should interview several agents from small and from large firms.  Get references and success stories.  Opting for a friend or family member who is a Realtor doesn't assure one of the best results in all cases and it could cause a rift.  Choosing an agent who suggests the highest list price is not a recipe for success and neither is opting for the agent who charges the lowest commission.  Remember that the following qualities in a Realtor will usually get the job done right: smart, empathetic, experienced, dedicated and one that pays attention to a buyer's list of wants and needs in a house!

 

 

7. Not Realizing The Other Costs Involved in Homeownership: If a client is preapproved for a mortgage with a lender, that preapproval is based on their gross, not net, income.  This means that they may can qualify for  a payment that is higher than they may want to spend.  Mortgage lenders do not take into consideration, unless it's a VA loan, the cost of lawn maintenance, utility bills, groceries, insurance, childcare, pool maintenance, entertainment, gas, auto repairs, etc.  Just because a client can afford $1,500 a month doesn't mean that they should buy a house that uses all of that to pay just the mortgage payment.  Because today's largest pool of buyer's are first time homebuyers, it is very important that the Realtor explain all of the other expenses that the client may not realize will be involved with owning a home!  Opting for a dream home that may otherwise create negative quality-of-life challenges (ie: longer commutes, higher taxes, bad schools) can cause buyers to question their decisions after a few months.  If a buyer purchases a home and finds that the other expenses involved causes them to lose that home or not be able to afford to do much else (house poor), how many referrals do you think they will give you??!!

 

 

8. Not Knowing What They're Signing: The sales contract is a legally-binding document.  Buyers and sellers should review it as if their legal well-being were at stake (because it is!).  It should address all concerns of both parties, such as who will pay what for closing costs and repairs.  A poorly written or incomplete contract can cost time, money and emotional energy and tie up a deal for weeks or months.  If there have been any oral commitments, they should be put in writing.  Also, realize that just because a house is being  sold "as is" per the contract, most lending programs will not let a property close that has certain repairs necessary if they are pointed out on the appraisal (ie: roof leak, exposed wiring, etc.)  Always address a dollar amount of repairs that a seller is willing to pay on the contract instead of leaving it blank to make sure that the house makes it to closing.

 

 

9. Not Paying Attention to The Good Faith Estimate: As mortgage lenders and brokers, we are all required to give a client an estimate of the costs involved in the closing of the property.  In fact, we are required, BY LAW, to give this to a client no later than 3 days after they make loan application.  As a Realtor, go over the estimates with your client!  There are unscrupulous lenders and brokers who will intentionally leave certain costs off (ie: escrows) or intentially underestimate the cost of other items (ie: taxes, insurance, title company fees) just so that a client will go with them and then the client finds out too late (at or immediately prior to closing) that they have to bring more money to closing than they initially thought.  What do you suppose happens if the client doesn't have the additional money to pay these fees??

 

 

10. Waiting for Prices to Go Down or For Interest Rates To Drop (aka: timing is everything, but maybe not in the sense you're thinking): Right now, mortgage interest rates are at or very close to historical lows.  Housing prices have decreased, as well.  I read an article that indicates that we are very close to reaching price stabilization.  Once that is reached, prices will start to increase.  Mortgage rates may go a bit lower, but there is always a chance that they will increase.  If a buyer is hoping that the price or rate will drop and either one goes the other way, it will end up costing them.  How do you know the bottom is reached until it is too late?  Buyers need to get the psychology of "what is my interest rate" out of their head and look at the monthly payment - that is what you write a check for every month!  Increasing rates and decreasing prices can cause a mortgage payment to be higher than what it may have been at a higher price!  If you have a client looking for to purchase real estate, find out what PAYMENT AMOUNT they feel comfortable with and work back from that instead of calling your lender to ask "what's the rate".  Rates these days are contingent on exact credit scores in most cases and while someone with a 740 credit score may be getting a rate of 5.25%, a client with a 650 credit score may end up with a rate that is 1-1.5% higher than that!  It's not about the rate - it's about the MONTHLY PAYMENT!

 

I hope that this list offers you some insight into those things that we see that make buyers and sellers upset and can cause them to change their mind about buying or selling real estate or referring their friends, family and coworkers to you in the future.

If you are working with any buyers in Florida, Alabama, Georgia, the Carolinas or Tennessee, we would love the opportunity to work with them and insure that your deal gets to closing and, if it's not doable, not hesitating to tell you up front!

I wanted to share the response I received from someone at USDA today on the increase in the income limits.  It still sounds very promising!

Here is my ‘canned' response sent to all inquirers.  If it happens (we're very optimistic), it will be incorporated at the same time as our regular annual income adjustment, late March, early April, maybe by March 20, depending on when we get data from HUD (for the regular increase).

________________________________

NO guarantee but optimistic.  Hopefully around March 20, maybe a little later.  It would use the 4-person limit for the 1-4 person households, and use the 8-person limit for the 5-8 person households.  Example, for your area, the limit for 1 person, 2 person, 3 person, or 4 person household would be $70,750.00.  Again, no guarantee this will happen.  They are waiting on final OK from the Obama team.

Please dispel the rumors.

Lenders successful with utilizing the Rural Development loan product have learned they can maintain a high volume by continuing business as usual.  The Guarantee will come through! The economic stimulus package contains more than double the allocation received last year. In addition, we will soon receive our regular annual allocation.

For an abundance of RD guaranteed residential product information, go to www.rurdev.usda.gov/fl/guarrhs.htm

Thank you for participating in the USDA, Rural Development guaranteed loan product. 

Today may be the day that the American Recovery and Reinvestment Act of 2009 (aka the Stimulus Package) is passed; the Senate is voting on it right now.  It is anticipated that it will be on President Obama's desk to sign into law this weekend.  While we don't have all of the information about this Act, here are some highlights: 

• Contains a record-setting $10.472 billion in funding for the USDA Guaranteed Rural Housing Program to insure Rural Housing mortgages.  These funds are in addition to funds the program has already received through the Continuing Resolution, as well as additional funding expected from Fiscal Year 2009 Appropriations legislation or further Continuing Resolution legislation.  Again: WE HAVE NEVER STOPPED CLOSING AND FUNDING USDA RURAL HOUSING LOANS AND WILL CONTINUE TO DO THEM EVEN WHILE OTHER LOCAL LENDERS HAVE STOPPED AND ARE TELLING YOU THEY ARE OUT OF MONEY! 
• There was a rumor that the USDA guarantee fee was going up as part of the Stimulus Package; it will remain unchanged at 2.0% for purchase transactions. 
• There was a tax credit increase requested by the Senate; it has since been scaled down to $8,000 (or 10% of the value of the home, which ever is lower) from $15,000, which is still $500 above where it currently is.  This is for any first time homebuyers who purchase homes from the start of this year until the end of November.  It starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.  Buyers will have to repay the credit IF they sell their homes within three years.

More details will be provided to you concerning the impact of the Stimulus Plan once we go through the final version that is signed into law.  Until that time, none of these are in effect yet.

Over the last 18 months, since August, 2007, mortgage guidelines have been tightening due to the conditions of the industry.  It seemed that every day since then we have gotten updates from Fannie Mae, HUD, Freddie Mac and our individual investors that made mortgage lending a little tougher, albeit still possible and not as hard as the news media states.

However, on Friday, I received an email from a fellow mortgage lender in the Tampa area with an attachment from Fannie Mae.  A while back, both Fannie and Freddie tightened up lending for buyers of 2nd homes and investment properties to the point that they could not purchase additional properties if they already had four (4) mortgaged properties, including their primary home.

I have been interviewed by newspapers and Good Morning, America and my focus has always been the same: they should allow those people who have good credit, sufficient down payment, good and deep credit, and reserves after closing and who have debt to income ratios of 45% or less to buy additional properties.  This would help the market because these are the people who would love to scoop up some of the great deals that are available in the real estate market these days.  It appears that Fannie Mae listened!

The new Fannie Mae guideline, that goes into effect for mortgages purchased after March 1, 2009, allows buyers to have 5 to 10 financed properties if they meet strict conditions.  They have to have 25% down for a 2nd home and 30% down for an investment property.  There are reserve requirements dependent on the type of property they are purchasing.  There are debt to income restrictions, as well as a requirement for allowing rental income only under certain conditions.  But the fact remains: this is the first LOOSENING of guidelines that we have seen in a LONnnnnnnnnnnnggggggg time and it could point to better times ahead!

While Fannie Mae is loosening, I have checked with all of our investors and, so far, none of them are following suit.  Some had said that since Freddie Mac hasn't loosened their guidelines that they are not going to loosen theirs.  I would like to think that Freddie will follow suit soon and that the investors will then allow us to offer mortgages for buyers of 2nd homes and investment properties with more than 4 financed properties.  We just have to wait and see but I truly believe that this is a good sign for the mortgage industry and the real estate industry!

It is amazing to me to see how many phone calls we are getting from around the country asking how we can still do USDA Rural Housing loans since they are "out of money"!  It is a misconception that the USDA lends money - they don't!  Their role in the USDA Rural Housing Loan is to guarantee (insure) the loan against default.  That is why the have the 2% funding fee as opposed to monthly mortgage insurance.

Currently, they have used the entire appropriation that was given to them by Congress for FY2009; however, they are still issuing conditional guarantees that say "subject to new Congressional appropriation".  In fact, a mortgage lender or broker used to have to reserve funds for this program but this year you don't because they have been told that they have appropriations that are perpetual, meaning that they will be reissued but they have to go in front of Congress to have them signed.

While many lenders and brokers are finding that their investors (the ones that actually DO lend the money) are not willing to fund these mortgages until those appropriations are signed by Congress, we at Northstar Mortgage Group are still originating, closing and funding USDA Rural Housing mortgages.  We had one that closed Friday, one closing tomorrow, and two closing on Tuesday and they are being funded!  It is up to each individual investor as to whether or not they will take the chance and our investors firmly believe in this program and in Congress to appropriate additional funds for guarantees so they are allowing us to continue to close these types of mortgages.

Because of this lack of belief on the part of many other investors, we even got 4 new mortgages in from other lenders/brokers this week that will be closed by the end of next week.  We underwrite the USDA loans in house, we fund with our own money, and are able to get them closed quickly.  If you are being told that your lender won't close on this program and you have a contract expiration, please feel free to contact me and let's get your loan closed while others stand on the sidelines saying they can't be done!