MMC - The Mortgage Source for Realtors in Chicagoland (6/11)

Good morning…

I went ahead and forgot my sunscreen at home again and now I feel like I’m

in a mobile sauna. I hope you all enjoyed the great weather this weekend

and aren’t too sunburn! Here we go…

On today’s call: Markets, Housing, Gift Funds, Interest Rates

-        The stock market started off today strong but is pulling back some.

Greece is still dominating the show, as officials in the EU determine

what will happen if Athens decides to leave the Euro. Spain received

bailout money today but many believe they’ll have to come back for

more. Investors are quite nervous about Europe in general, yet also

anxious for the upcoming Federal Open Market Committee meeting

next week. Another round of quantitative easing is assumed by many

to be forthcoming. Keep an eye on this news as it will have a large

impact on the housing industry.

-        There is an expectation from investors that a wave of new downgrades

on major banks will be coming shortly. It’s been reported that Moody’s

is set to downgrade 17 large global banks, including five of the six biggest

US firms (JPMorgan, BofA, Citi, Goldman, and Morgan Stanley). These

downgrades will affect the banks’ ability to raise capital to support their

trading and lending. When this happens, the banks raise their fees for

borrowers, either in rate hikes and/or fee hikes. Here at CFS, we’re doing

everything we can to make sure our costs stay as low and competitive as

possible. We’re already beating the majors in rates by a long shot too!

-        This week’s mortgage tip revolves around gift funds. Borrowers are allowed

to receive and utilize money from an acceptable and verifiable source, in

order to assist or cover the down payment. Gift funds are allowed on both

conforming and FHA loans and provide a great way to purchase a property

that might otherwise not be affordable. The borrower must still qualify for the

loan payment, obviously, and available “reserves” (liquid and/or non-liquid

money left over after the deal closes) must be present, usually to cover at

least 2-3 months of the entire monthly loan payment. Here are a few things

to remember about gift funds:

1)      They are allowed on primary and secondary residences only

2)      They may fund all, or part, of the down payment and closing costs

3)      They should be primarily from a blood relative or a spouse

4)      If the down payment is less than 20%, the borrower may be required to

show he/she has  5% of the down payment in their own funds

5)      They must be verified à the donor(s) and borrowers must sign a letter

that explains the gift. We also have to show a paper trail of the money coming

out of the donor’s account and going into the borrowers account.

         There are other things involved with gift funds but these are the most important.

         It is amazing how many people don’t know that gift funds are acceptable. Make

         sure your clients are informed, especially the first-time homebuyers.

-        Interest rates are unchanged for the most part. The 30 year fixed, in general, is

in the mid-to-high 3% range, depending on the scenario. If your client needs a

rate quote, please have them contact me whenever

Thanks to Jill for the investment property referral. It’s nice to work with borrowers

who have their “ducks in a row.” I hope everyone has a great week and please don’t

hesitate to contact me for anything.

JP