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.