Living In Tucson Blog

Finally some good news for borrowers buying a home with VA loans. Effective October 1st, the VA funding fees are going down! With a down payment of less than 5% for a first time user of VA benefits, the fee is 1.4% down from 2.15%. (Reservist/Nation Guard borrowers pay 1.65% – currently it’s 2.4%). Second or subsequent users of VA loans will have a funding fee of 2.8% (currently 3.3%) until October 1, 2012. From October 2011 to October 2012, the fee will be 2.15% and after October 1, 2013, it will be 1.25%.

The funding fee  for refinances will continue to be .5%.

VA loans are a great deal for those that qualify! Active military or qualifying veterans can buy a house with a zero down payment and no mortgage insurance. If you already have a VA loan with a rate of 5% or higher, you might consider a refinance. Remember, in most cases, a VA refinance does not require an appraisal.

My company, PHH Home Loans (and our sister company, Coldwell Banker Home Loans) offers a discount for active military borrowers for purchase loans or refinances. To find out more details, call me, David Wolsky at (520) 275-2536 or email me at david@davidwolsky.com.

My dad always advised me to buy low and sell high! You would be hard pressed to find a better market for mortgage rates and real estate pricing. Have you heard that the affordability index has measured that home buying is at it’s most affordable level in since the 60′s?  Tucson is a great market for buying real estate and it’s no secret that housing values have plummeted in Arizona. There are lots of foreclosures and short sales offering  very low home prices. Check out www.homepath.com for Fannie Mae owned properties. My company, PHH Mortgage offers special financing terms for a Home Path Mortgage (we are not currently offering the Home Path Renovation Mortgage at this time). Home Path Mortgages can be obtained with a 3% down payment (or more), there is no mortgage insurance and they do not require an appraisal. Fannie Mae often pays for the buyers closing costs too.

If you already own your house, have you thought about a refi? Here’s an article from yesterday’s USA today: Mortgage Rates Reach Record Lows, Sparking Refinancings.

The article indicates 63% of residential mortgages have rates above 5% and 46% of homeowners have 20% or less equity in their home. It is harder to refinance your home without sufficient equity. It can be hard to refinance your home with equity too as underwriting guidelines continue to get tighter. However if you qualify, now is the time. 5/1 ARMs are currently below 3% APR. According to this week’s Freddie Mac survey, 15 year fixed rates are at 3.5% and 30 year fixed rates are at 4.32% which is very near the record low. Freddie Mac has been tracking rates for over 40 years.

What if you don’t have equity and you still want to refinance?  You might qualify for the HASP (Home Affordability and Stability Plan) program that can enable you to refinance your loan even if the current mortgage is up to 125% of the home’s value. You had to have purchased your home before June of 2009 and the existing mortgage is with Fannie Mae (www.fanniemae.com) or Freddie Mac (www.freddiemac.com). Go to the Look Up tool to see if Fannie Mae or Freddie Mac owns your mortgage. They do not service the loans, but they are the investors.

Call me to review your options. David wolsky at 520-275-2536 or david@davidwolsky.com.

It’s been a while since my last post. I think I have some readers out there! (Hope so.) The past few months have been very intense with personal stuff and the Tucson real estate market has been keeping me very busy as well.

As an originator, I am involved from the start to the finish of every transaction. Although I am part of a team that consists of loan processors, underwriters, management and more, I am the one on the front lines. It is a lot of responsibility in this market when it comes to conventional and government loan processing. Verification is the key to getting a mortgage approved in 2011 including a thorough verification of the borrower’s income, assets and credit. For example, if you are self employed, two years of tax returns and a profit and loss statement will be necessary. If you receive a bonus, a written verification of employment sent to your employer will help us determine a track record of the bonus income and the likelihood of continuation. Part time income is only accepted if you have a two year track record of receiving it. Hourly wages will be reviewed to see if there are unpaid furloughs or excessive time away from work.

Underwriters are reviewing every deposit on your bank statements. Be prepared to provide a ”paper trail” to explain yourselves. If you sold some gold or a car for your down payment, you will have to prove you owned the asset, the current market value and the proof of sale. There is no doubt about it…credit is tight! Another area of scrutiny is the debt ratio. First the income analysis is determined. Then we look at your credit report and other monthly obligations such as house payments on retained properties and alimony or child support payments. The formula is keeping the new house payments and other monthly debt obligations to 45% or below your gross income (before taxes). In some cases, a 50% debt ratio is acceptable, but there are requirements for credit scores and additional assets besides the down payment. If you have mortgage insurance on a conventional loan because your are borrowing more than 80% of the sales price, the maximum debt ratio is 41%. FHA and VA mortgages go up to 45% in most cases. When considering a home purchase, remember to look at the real estate taxes, insurance and homeowners association fees to get a true picture of your new total house payment. I have seen loans get adjusted or even declined at the last minute because inaccurate taxes, insurance and HOA fees were higher than originally anticipated on the initial application.

It is not enough to have great credit and a down payment to get your loan approved. At times, it has been easier for me to get a young couple approved with a FHA loan and a 3.5% down payment than a couple of executives borrowing $400,000 with a 60% down payment! Underwriters were afraid to say no to loans in 2005 and 2006 and they are afraid to say yes in 2011! I am here for my customers to make sure that the underwriters say yes to your deals! Call me, David Wolsky, for a free loan pre-approval at 520-275-2536. You can write me at david@davidwolsky.com. Thanks for stopping by my blog.

Outside Magazine has recognized Tucson, AZ as on of the best towns in America based on a balance of great culture, perfect scenery, stress-free and reasonable cost of live and easy access to the outdoors. The winner will be featured on the cover of the October issue of the magazine. The other contenders are Charleston, S.C., Chattanooga, TN (currently has the most votes), Madison, WI, Portland, ME, Santa Fe, NM, Ashland, OR, Boulder and Burlington, VT.

You can vote at www.facebook.com/outsidemagazine until June 26th.

Go Tucson!

Get Your Government Hands Off My Mortgage Industry!

Bank regulators and Congress are looking to make more changes to guidelines for conventional and FHA mortgages. Congress would like to privatize Fannie Mae and Freddie Mac. The timing of these changes is challenging, considering the struggling housing market and anemic economic recovery. Among the proposed changes being proposed are increasing the minimum down payment for conventional loans to 20%, setting higher income and credit qualifications and reducing the maximum loan limits. FHA proposals include increasing the minimum down payment to 5%. These changes will certainly eliminate potential buyers, causing the housing market to take a longer time to recover.

Short Sales Aren’t Alway Short!

In my mortgage practice, a large percentage of my deals are “short sales” or bank owned properties. Recently, I had a customer that offered to buy a home with a short sale. The listing agent set the sales price, the buyers agreed and  after several weeks, the bank declined the offer. The house will be foreclosed instead. It is likely that another buyer could buy this house on the steps of the courthouse for a lower price than the short sale offer than my customer had offered on the home. I guess the bank decided they could make more money foreclosing the property than accepting the short sale offer. Why else would they turn down a qualified buyer. In fact, he decided to pay cash for the house and the bank still turned him down. Another factor that makes short sales so tough to execute is junior liens. In other words, the current owner of the house has a first and second mortgage and both lien holders have to agree on the sale. This dynamic usually means the junior lien holder (second mortgage or HELOC), is taking a beating on the balances owed on their loans.

I had another interesting deal that closed a few weeks ago. The buyer was buying a short sale and it took months for the first and second lien holder to agree on the terms of the sale. Once it was finally approved, we put the loan in process. The listing agent requested that we close the loan within three weeks of the short sale approval. During those three weeks, we find out that Fannie Mae was going to auction off the house in a foreclosure acout a week before we were scheduled to close. We were able to stave of the foreclosure with a lot of persuasion from the REALTORs involved with the sale and the buyer was able to get the house. The first mortgage lender probably should not have approved the short sale if they knew the investor (Fannie Mae) had begun foreclosure proceeding.

Foreclosures are much easier to buy. The lenders are offering terms to sell the homes. For example, Fannie Mae (FNMA) has a program known as HomePath. They typically will offer 3.5% of the sales price as a concession to the buyer for a primary residence or a second home. The offer 2% for investors. The program does not require an appraisal and there is no mnortgage insurance required if you have a down payment below 20%. A million foreclosures are anticipated again this year. Half of the homes in Arizona have negative equity and home values continue to go south. Hang in there as time heals all wounds. The first quarter of 2011 has been robust for home sales in Tucson.

Tucson Is #4!

According to Inman News, Tucson is considered a top five best markets for investors thanks to the declining housing prices. Of the top ten, only two cities were out west (Tucson and Salt Lake City). The report looks at economic data, housing and demographics including the median price of homes, loan data and foreclosure sales.

If you have any questions about real estate in Arizona, contact David Wolsky at 520-275-2536 or david@davidwolsky.com.

Article in today’s Arizona Daily Star:

http://azstarnet.com/article_93344c38-9999-51b7-aa5d-1ee85580ab87.html

I hope they’re right!

Total applications for FHA insured mortgages are down 30% through March in 2011. Most FHA buyers choose the minimum down payment of 3.5% of the sales price for a purchase transaction. Effective Monday, April 18th, changes to FHA loans were implemented. One big change is a higher monthly mortgage insurance premium. Borrowers will now be paying 25 basis points more each month. This is the second increase in the past six month. The new premium is 1.15% up from .90%. For example, the new premium for a $150,000 mortgage is $1725 annually charged in monthly premiums of $143.75. The previous premium was $1350 or $112.50 per month which is an increase of $31.25 per month! There were no changes to the  1% premium up front premium that is financed in the mortgage. The government insures FHA mortgages with these premiums. The higher premiums are squeezing some buyers out of the housing market. Borrowers with a 720 credit score (In Arizona) can still obtain a conventional mortgage with a 5% down payment and private mortgage insurance.

PHH Home Loans and Coldwell Banker Home Loans has announced new minimum credit scores guidelines for FHA loans. Applications are now being accepted with credit scores as low as 500 with a 10% down payment, assets of at least two monthly house payments verified in addition to the 10% down payment and debt ratios of 31% of the gross income for the house payment and 36% for all debt including the new house payment. The minimum credit score for a 3.5% down payment, is now 600 (down from 620). These terms can vary lender to lender. Other mortgage banks use 580, 620 or 640 for their minimum scores.

What’s next? Congress has passed a bill to eliminate FHA! I doubt that it will ever become law. It is more likely that Fannie Mae and Freddie Mac will be spun off from the government. Personally, I think these proposed changes will devastate a very shaky housing market. FHA loans already account for a major percentage of all home loans. Spinning of Fannie and Freddie would result in much tighter underwriting guidelines including 20 to 25% minimum down payments. You can expect FHA to raise the minimum down payment to 5%.

I’m David Wolsky and I can answer any questions you may have regarding various loan programs available at PHH Home Loans and Coldwell Banker Home Loans. The email address is david@davidwolsky.com or call (520) 275-2536.

Wow, it has been weeks since I have added a new entry to my blog! Life has been very busy with business and personal issues. I hope to be adding material more often in the upcoming months. One change implemented over the past month is my updated website, www.livingintucson.com, which now includes my blog.

I watched tonight’s episode of 60 Minutes and the first story was called “The Next Housing Shock”.

The report detailed robo-signings of forged mortgage documents including interviews with people who were employed to sign 350 signatures each hour on falsified mortgage documents for loan servicers to foreclose homeowners. The Wall Street appetite for mortgage backed securities was insatiable. Mortgages were bundled and sold throughout the world to investors. There were good loans and bad loans in these bundles of loans. As the housing market started failing, hundreds of thousands of mortgages were  performing badly and the loan servicers initiated foreclosure proceedings. The problem is, you may make your payments to a mortgage company such as my former company, American Home Mortgage Servicing, but American Home Mortgage does not own the mortgage. Who does? The mortgages are owned by many different investors, however it is very difficult to unravel the web and ascertain who actually owns the loans! Phony documents were created to expedite the foreclosure proceedings and now there are thousands of lawsuits out there with all 50 state’s attorneys general involved to get this horrible mess cleaned up. Personally, I think the banks should take some of their record profits and TARP funds and be accountable. After all, the banks and Wall Street created this debacle and reaped the benefits when the cash was rolling in. It’s time for them to share the pain that American homeowners have been experiencing.

With declining home values, rising interest rates and FHA, Fannie Mae and Freddie Mac changes around the corner, now is the time to take advantage of the Tucson housing market and buy that house! Even waiting 60 days could cost you thousands.

The Obama administration released their “white paper” this past week on the housing market. The impact of their proposals could launch major changes in the mortgage industry. FHA has already announced .25% higher mortgage insurance fees effective on April 18, 2010. You can expect monthly payments to rise $30 per month for a $150,000 mortgage. It is my understanding that the government would like to reduce FHA’s exposure from its 30% market share of mortgages down to 10%. It is unclear where homebuyers can turn to for loan programs that will be similar to today’s FHA mortgages. Tomorrow’s FHA home loans will consider raising the minimum down payment which are currently 3.5%. As you can imagine, most people are already strapped for down payment money. The report also suggested that higher down payments should also be considered for conventional loans. A 10% down payment was recommended. The current terms allow a 3% to 5% down payment depending on the borrower’s qualifications. Other changes include reducing the maximum loan amounts under FHA and conventional mortgages in the so-called “high cost areas”. Those changes do not appear to impact loan limits in Tucson or Phoenix. Fannie and Freddie have raised their fees charged to lenders to guarantee pools if their mortgages for resale to bond investors. Lenders will pass along those charges to consumers. The hits just keep on coming! Fannie and Freddie recently began charging additional fees for borrowers with a credit score below 740 and down payments less than 25%. Those charges will translate to slightly higher rates or points for consumers.

If you are on the fence to buy that house, don’t wait! Call me, David Wolsky for mortgage advice. I can be reached at (520) 275-2536 or at david@davidwolsky.com. My company, PHH Home Loans is offering a $350 lender credit towards are closing costs which are already amongst the lowest in the business.

Throughout the month of February, PHH Home Loans and Coldwell Banker Home Loans is offering a $350 discount for registering a new purchase or refinance mortgage. This applies to all loan programs. There is also an additional discount for active military and returning vets. Remember the first time homebuyer credit last year? Well, it’s still in effect if you are a returning veteran after being deployed overseas. You must be under contract through April 30th, 2011 and close by June 30th, 2011 to be eligible.

David Wolsky can be reached at 520-275-2536 or email at david@davidwolsky.com.