I have always felt that the jobs and unemployment numbers the government releases (and which have an effect on both our stock and bond markets, the latter which drives mortgage rates) are flawed. Especially the unemployment numbers. The reason is that there are many people in our current economy who fall off of the reports because they’ve been out of work too long and their unemployment benefits have expired. This can lead, like they did a few months back, to artificially positive numbers. The June jobs report was lower than expected, meaning less jobs were created than anticipated by the “experts”. This is not really a surprise, I don’t think, since I continue to see companies going out of business and few new businesses opening.

While this indicates to me that the economy is not yet moving in a positive direction, it does mean that my business will hopefully begin to pick up! It should, considering housing prices are low and rates are low. This is not usually the case in the real estate market. Please contact me for your new mortgage and I’ll have you in your home in 2 months! No kidding!

* No Downpayment Required — 100% Financing (only program in today’s market that offers this benefit)
* A 4% Seller Concession is allowed, to pay for certain closing costs (less out of pocket funds required at closing)
* No PMI (Private Mortgage Insurance) — although an upfront funding fee is required and can be financed or paid by the seller concession
* Interest rates similar to FHA rates (yesterday’s rates were under 5.50%!)

Prospective borrowers still need to qualify based on income and credit, and must live in the home as their primary residence. If you’re furtunate to qualify for VA financing, take advantage of this great program to purchase your new home (or refinance to a lower interest rate). If you live in Dutchess or Putnam county, or anywhere in NY for that matter, contact me for a free consultation.

I spoke with a prospective customer the other day who had found a home that he wanted to purchase with his wife. They have always rented and were tired of not building equity and throwing their money away renting. This makes sense. He called me and, after speaking with him and taking an application it sounded like there would be no issues. Well, after pulling his credit I had to inform him that he did not qualify to purchase this home based on his credit.

Nowadays, banks are stricter in terms of debt ratio (your gross income/proposed housing payment including taxes and insurance) and credit score than in prior years. I don’t necessarily think this is a bad thing. They want to make sure that you have a history of paying your bills on time and that you can afford the new housing payment so they won’t need to foreclose. It makes sense.

So that you don’t have your heart broken when you think you’re going to purchase your dream house, have a reputable mortgage banker/broker take an application and pull your credit and issue you a pre-approval. This way you know that you will have the financing to act when you find that great deal in today’s depressed real estate market.

Well, rates have been bouncing around the last week or so. We’re at 5.5% today for a 30 year fixed. According to the article, experts are predicting that rates will drop from where they are today and they actually predict that we could see rates drop below 5% again. This is obviously no guarantee but it makes sense. In my opinion, the economy is still in a shambles and there is really no inflationary pressure to push rates higher. It’s important for rates to stay low to help jump start the economy.

Anyway, the article went on to say that you customers — home buyers and people looking to refinance — need to be ready for when the rates do begin to fall. It takes much longer than it used to to close on a mortgage. Banks are shortstaffed (because of lay-offs) and the ones still standing are actually overwhelmed with files. And, the banks won’t even look at your file unless it’s complete. You need to do the following:

* Choose your mortgage broker/banker
* Complete the mortgage application and have your credit pulled to ensure your credit qualifies you
* Give your broker/banker all necessary income and asset documentation
* Have the appraisal done — home values are down and the appraisal is probably the number 1 killer of mortgages in today’s market (particularly refinances and reverse mortgages but also purchases in situations where the seller needs a certain amount of money to walk away whole)

If you aren’t prepared, you may miss the next interest rate reduction.

The credit can be claimed on 2008 or 2009 tax returns. Homebuyers who get a loan backed by the Federal Housing Administration can use the money to cover closing costs and other fees.There are some creative tax planning strategies that the buyer can employ as well.

The tax credit, for home purchases made through end of November, comes with income thresholds, $75,000 for individuals and $150,000 for joint filers. After those limits, the credit begins to phase out. If you bought a home this year and expect your 2008 income to be lower than next year’s, it makes sense to file for the credit this year using a 2008 amended return.

However, if you think your income will decrease, due to job loss, wage cuts or hour reductions, it makes more sense to file for the tax credit on your 2009 tax returns to get the most out of the credit, Meighan said.

Another benefit to waiting until you file your 2009 return is that you can increase your take-home pay. By taking the credit next year, you can change your tax withholding status with your employer now and get more on a paycheck-to-paycheck basis.

You’ll be giving up a “fatter” tax refund next year, but each month you’ll have more change in your pocket.

Also, don’t forget to reduce your federal and state tax withholding to account for the tax deduction you can take on the mortgage interest and property taxes you pay.

Last month, the FHA said its borrowers can receive advances on the $8,000 first-time homebuyer tax credit from lenders, so they don’t have to wait to get the money next year from the IRS. Borrowers will still have to come up with the FHA’s required 3.5 percent down payment, but the advance from the tax credit can be applied toward closing costs, fees or to increase the down payment.

Real estate prices operate on the simple premise of supply and demand. There are many more houses listed for sale than qualified buyers looking to purchase. In many cases, those qualified buyers need to sell their existing home first, which compounds the issue.

Who knows if this forecast is accurate or not? I don’t know. It makes logical sense. The low mortgage interest rates have been helping some, but the tight credit guidelines and appraisal review process at the banks are hindering any substantial rebound. I still think this is a good time to buy. Money is cheap and the market will turn around at some point. If you are considering refinancing, I would get off the fence and do it now while you still have equity. If Deutche Bank is right, a 20% decline from today’s prices will suck every last bit of equity from the few who still have equity after the refinance boom of a few years ago and the days of 100% financing.

Luckily, FHA has a program that allows a non-occupying co-borrower. FHA only offers programs for primary residences (no investment properties or vacation homes) but will allow the Dad to go on the loan and use his income and assets to qualify, along with the son’s, and not be required to live in the house. The co-borrower’s income and assets and credit are used as qualifiers, as well as their debts. And, it’s important to note that the co-borrower is just as responsible for the debt as the borrower, even though they’re not living in the home.

This is a great program for situations such as this, as well as for First Time Homebuyers when the parents are willing to help their children purchase their first home.

Another great thing about FHA mortgages is that they allow for up to 97% of the purchase price/value to be borrowed, requiring a modest down payment.

She only has to put down 3.5%! Save the rest of what would have been used for the downpayment to buy furniture and other essentials that you need when you move into a new home.

The seller’s real estate agent is a little nervous. In the past, when you heard FHA you immediately thought very stringent underwriting and appraisal guidelines and a poor credit borrower. This is no longer the case. Especially in light of how difficult it is to obtain PMI now, FHA is the most viable loan for many customers who either don’t have the 20% to put down or would prefer not to.

I guess the moral of the story is that FHA is the loan of choice now for many who wouldn’t have needed to consider FHA in the past.

I have a relationship with many different wholesale lenders (Wells Fargo, Bank of America, Suntrust, etc.). Depending on the product, these lenders price their loans differently on the wholesale side. By pricing, I mean how much will they pay the broker (yield spread) for a specific loan/rate. For example, a 30 year Fixed Rate mortgage, which is the most popular mortgage loan by far, will have different pricing depending on credit score, loan to value (what percentage of the home value are you looking to borrow), cash out for refinances, investment properties, multi-family homes…the list goes on.

As a broker (I broker most of my business), I need to look to multiple lenders to find the best pricing for my customer for their specific scenario. By best pricing, I mean the best rate that will also compensate me for my efforts. An option I’ll also offer is to give the customer the best Par (best wholesale rate with no yield spread paid to the broker) rate and have them pay origination point(s) to compensate me. This is a big advantage to just having one “rate” to quote.

I know that sometimes customers think I’m trying to skirt the question when I tell them I can’t just blindly quote a rate. This is because some of my competitors quote unrealistically low rates in order to try to get business and then ‘bait and switch” when the time comes to lock the rate. This isn’t how I work (and I’m sure I’ve lost a lot of business because of that) and my customers eventually appreciate that.

Next time a customer calls me, I want to hear “What is MY rate?”!

A VA loan has very competitive pricing for interest rates and does not require that the borrower pay PMI (Private Mortgage Insurance). PMI is typically required when a customer borrowers more than 80% of the value or purchase price of the home. This can be a savings of a few hundred dollars a month. There is a one time, upfront “funding fee” required that pays to insure the loan for the lender against default. This funding fee is rolled into the loan and does not count towards the LTV (Loan-To-Value) ratio. Meaning, the actual loan can be higher than 100% of the purchase price.

If you are a veteran, there is no better loan out there. If you are a recent veteran who wants to take advantage of the depressed real estate market but doesn’t have the cash for a down payment, you should definitely consider a VA loan to help you get into your first home!