A host of things can “go wrong” while your home loan is underway. Some are in your control, many more are not.  And just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

MSN Money ran a summary piece on the topic titled “10 Things That Can Kill A Home Loan“.

It’s an excellent article because, unlike most “get approved” articles that advise against things like buying a car before closing, or opening a bunch of new credit cards, the MSN Money piece addresses more uncommon factors that can lead to a similar loan turndown.

For example, a home may be unfundable if it’s unsuitable for human habitation — a condition you may not discover until after a thorough home inspection’s been made. Broken windows, lack of plumbing, and/or major foundation damage are all deal-breakers with a lender.

Either fix the home prior to closing, or don’t close at all.

Homes in “declining markets” have danger spots, too. Especially for conforming mortgage applicants with less than 20% equity.

Because of how private mortgage insurers operate, some homes carry tougher, ZIP code-based PMI eligibility requirements. As a mortgage applicant, it’s important to understand this because you may be PMI-eligible in one neighborhood, but not in another.

There’s others ways in which a mortgage approval can go bad, too:

• You’re self-employed and your income was lower last year versus the year prior
• Your tax return shows large amounts of unreimbursed employee expenses
• You failed to return required paperwork to the lender within a reasonable time frame

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with your real estate agent and your loan officer and put together a game plan.

The best way to beat the mortgage system is to know the rules before you start to play.

Related articles by Zemanta

• Senate votes to rein in mortgage lenders (seattletimes.nwsource.com)

No related posts.

One way to determine whether the time may be right for you to buy a home is to start looking at the rents in your community. When a full mortgage payment (including principal, interest, taxes and insurance) begins to equal or fall lower than rental rates, the market is typically near the bottom – and that means you’ll likely begin to see housing prices begin to stabilize or even head back up. In many parts of the country, we have already seen this occur.

The reality is, no one can time the market perfectly and find the exact bottom. But even if you don’t, it’s okay. Interest rates are at their lowest in decades, home prices are extremely low, and the government is offering a Homebuyer Tax Credit – and this combination yields the greatest increase to home affordability in years.

Seattle Mortgage Rates, Seattle Home Loans, Washington home loans, Washington Mortgage Rates

No related posts.

Classified as a ”hardship withdrawal”, loans against your retirement funds can be cheap and simple.

1. There’s no credit check or approval process
2. There’s only a small set of paperwork
3. Money can be available in as little as a day

But just because you can get access to your retirement money doesn’t mean that you should.  401(k) withdrawals should only be made after careful consideration.

There are some serious negatives, specifically with respect to taxation.

If you open a 401(k) loan and don’t repay according to the loan terms, the withdrawal ends up getting taxed as income, plus a 10 percent penalty for people under 59 1/2.

That’s a stiff penalty.

But, even if you do repay the loan on time, you’re still getting leaving yourself subject to double-taxation.

• Taxation #1 occurs when the loan is repaid using post-tax dollars
• Taxation #2 occurs upon final withdrawal at retirement

Furthermore, when you borrow against a 401(k), you assume the opportunity costs of having that money out of the market.  Since March, the Dow Jones Industrial Average is up 44 percent.  If your 401(k) was empty, you’d have missed those gains forever.

Taking a loan against a 401(k) isn’t necessarily a bad idea, there just may be better choices. If you’re planning to withdraw from your 401(k) to make a downpayment on a home, talk with a qualified financial professional first.

You can never have too much good information.

No related posts.

Minimum FICO levels are up 120 points or more and conforming mortgage lenders now levy large fees on borrowers whose scores are below 740.

Keeping your credit scores high is a worthwhile goal, but it’s not always easy to do – especially when you don’t know the ins-and-out of how the credit scoring system works.

The Wall Street Journal wrote a terrific piece on credit scoring this week. It’s full of helpful, relevant tips for home buyers, homeowners, and everyone else.

Aside from covering the five basic components of a credit score — shown at right – the piece provides insightfukl advice on credit-related topics including:

• The difference between a “hard inquiry” and a “soft inquiry”
• Why paying for your credit report is a foolish use of funds
• Why it doesn’t matter if you have an 800 FICO

The article also talks about the optimal balance a person should carry on their credit cards to get the biggest FICO boost.

Credit scores determine your mortgage rate.  Therefore, do what you can to keep your scores high. Follow the tips in the Wall Street Journal article and lean on public resources like myFICO.com.

Having good credit can be a real money-saver.  Month after month after month.

No related posts.

To: All Mortgage Brokers, Real Estate Agents, Appraisers, Lenders, Home Builders, Title Agents, and Consumers
From: Marc Savitt, President- National Association of Mortgage Brokers

After more than a year of exhaustive negotiations with Fannie Mae, Freddie Mac, James Lockhart, Director of FHFA (GSE Regulator), and NY Attorney General Andrew Cuomo, NAMB believes the time has come for your individual voice to be heard.

In order for this “Call to Action” to be effective, we ask that you fully participate, encourage others to join the action and continue calling and emailing every day, until advised to stop by NAMB.  This will NOT be a one day action!

We have received hundreds of e-mails through the hvcc@namb.org e-mail address outlining specific cases where the HVCC has created delays and additional costs to consumers. NAMB has categorized and compiled a report of the examples received, which was sent to FHFA Director James Lockhart. Please use your own examples in your conversations with legislators, regulators, or their staff. Also, please visit the NAMB HVCC Resource Center for additional information and documents on the HVCC.

Who will you be contacting?

NY Attorney General Andrew Cuomo’s Office: (212) 416-8000, Internet Complaint
Federal Housing Finance Agency (FHFA): (866) 796-5595, director@fhfa.gov
Fannie Mae: (202) 752-7000, headquarters@fanniemae.com
Freddie Mac: (703) 903-2000, Internet Complaint
Senators, Representatives and Governors: Click here for contact information.
Also, please contact your local TV and Newspaper outlets.

Below are talking points and background information to assist in your conversations. Please remember we are all professionals and should conduct ourselves accordingly in any communication with the above parties. For the most successful and influential calls, it is important to concisely quantify how the HVCC is affecting your consumer and your business.

Talking Points:

Background:

No related posts.

This week we saw the economy shed 539,000 jobs in April, raising the 6-month total to nearly 4 million jobs lost.

And while the April data may look bad, it’s actually 10% better than what was expected.

Now, it may seem odd to categorize 539-thousand lost jobs as “good-for-the-economy”, but it’s important to remember that on Wall Street, expectations are everything.

As it turns out — relative — the actual job loss data wasn’t so bad.

Now, markets are making adjustments and re-forming expectations of what’s ahead for the economy.  They’re preparing for things like higher levels of consumer spending in the months ahead, and fewer home foreclosures nationwide.  Both outcomes would help to spur the economy from recession.

Other economic data included the second consecutive month, the number of homes under contract to sell increased — further evidence that housing markets may have already bottomed.

As reported by an industry trade association, the Pending Home Sales Index rose by 3-plus percent last month.

A “pending” home is one that’s under contract but has yet to close.  This is one reason why the Pending Home Sales Index is an imperfect statistic.

Just because a home is under contract doesn’t mean it will actually sell.  A lot can go wrong between the date of agreement and the date of closing.  Deals fall apart all the time.  But, when the number of pending contracts rises, we can infer that buy-side demand for homes is strong.

It’s likely that the number of homes under contract is being influenced by a combination of low mortgage rates, relatively inexpensive homes, and various tax credits for certain homebuyers.  Overall, it’s spurring demand and that’s part of what’s captured by the Pending Home Sales Index.

So long as the demand for homes outpaces its supply, home prices are expected to rise.

No related posts.

The practice is not new, but, anecdotally, co-purchasing is becoming more common.

In the video above — filmed two years ago but still on-target today – real estate expert Barbara Corcoran provides good advice for co-purchasing partners.  Like any business relationship, it’s important to plan ahead.

• Hire an attorney to draft contracts and agreements
• Have a plan for when one or both parties wants to move or sell
• Consider life insurance policies on each other

The over-riding theme for co-purchasing arrangements is to be prepared.  Done right, however, they can create two proud homeowners where there would have otherwise been none.

No related posts.

This is the TRUE meaning of Lipstick on a Pig!  It is sad how BIG Marketing dollars can convince millions that you have a great Knowledgeable staff.

Country Wide slung tons of high priced/rate loans, and consumers ate it up.  I always shake my head in disbelief when potential client tell me “I am going to go with Country Wide”.  I do bask in the joy when I meet clients who tell me “My Last Loan was with Country Wide and it was nothing like they promised”.

Layer that Lipstick on and
Caveat Emptor

And so over the weekend, nearly 10 months after the Bank of America deal closed, Countrywide Home Loans signs came down and Bank of America Home Loans signs appeared at the lender’s 215 storefront offices in California. It was the start of a rebranding of nearly 1,300 Countrywide mortgage offices nationwide. (read full story)

Image: http://www.flickr.com/photos/brent_nashville/240072751/

Related articles by Zemanta

• Bank of America lets go of Countrywide name (money.cnn.com)

No related posts.

Although the FED announced to keep the FED Funds target unchanged, MBS gave up ground with the 30 YR FNMA 4.0% pulling back 22bp.  Mortgage Rates held their ground and closed where they ended yesterday.

The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today within its target range of 0.000-0.250 percent.  The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the economy may still be contracting, but that it’s not happening with the same speed as in prior months.  Household spending is stabilizing and financial markets are “easing”.

Nevertheless, threats to the recovery are everywhere with the following items on the Fed’s short list:

• The growing ranks of unemployed workers
• The reduction of housing wealth nationally
• Reduced inventories and investment from business

Furthermore, the FOMC fingered today’s inflation levels as too low to support economic growth.  This justifies the Fed’s plan to hold the Fed Funds Rate near zero percent “for an extended period”.

The FOMC’s next scheduled meeting is June 23-24, 2009.

Source
Parsing the Fed Statement
The Wall Street Journal Online
April 29, 2009

http://online.wsj.com/public/resources/documents/info-fedparse0904.html

No related posts.

For active home buyers who have yet to find the “right home”, long-term flatness like this is terrific.  While interest rates stay even, buyer purchasing power holds flat and pre-approval letters stay valid.

For buyers under contract or homeowners looking to refinance, though, the market’s pattern is a little more rough.  Although rates are holding steady week-to-week, the day-to-day action is quite different.  Bond markets are volatile and rate swings of a quarter-percent in a day have been common.

How good of a rate you get depends on day on which you shop. This complicates the process of “locking a rate” and makes it very hard for people trying to time a market bottom.

This week, though, the market may finally make a run and break its range.

Aside from it being an unusually data-heavy week, the Federal Reserve meets Tuesday and Wednesday to discuss monetary policy.  The data combined with the Fedspeak may push the markets one way or the other towards economic optimism or pessimism for the latter half of 2009.

Lately, it’s been a combination of the two — a “cautious optimism” — and that’s a big reason why mortgage rates have held in a tight range for so long.

Understand, though, that when mortgage rates finally do move, they’re going to move in a big way.  So, if you’re among the crowd looking for lower rates, the best possible outcomes you can hope for this week are:

• Weak consumer confidence data (Tuesday, Friday)
• Weak consumer spending data (Thursday)
• Falling “cost of living” calculations (Thursday)
• Fed concerns about deflation and/or recession (Wednesday)

Any of these four events would likely temper hope for a quick economic revival, sending mortgage rates lower.  On the other hand, if confidence or spending is strong, or the Fed has no regard for deflation or recession, expect mortgage rates to rise.

No related posts.