Living In Tucson Blog

HARP stands for Home Affordable Refinance Program. Eligible borrowers obtained their original mortgages prior to July of 2009. You can borrow up to 125% of the current value. Some loans will require an appraisal and others do not. It was designed to help millions of borrowers get relief though, unfortunately, the program has only helped a few hundred thousand homeowners. I have had mixed success with my customers with this program. The first thing to do is determine if Fannie Mae or Freddie Mac owns your loan. They have search engines on their websites, www.fanniemae.com or www.freddiemac.com. Remember, you don’t make your payments to Fannie or Freddie. They are investors, not loan servicers (collecting the payments). That means they buy the loans and pay a premium to lenders to service the loans. The best bet is going back to the lender who is servicing your loan and find out if they can refinance your home.

Currently, there is no relief for underwater homeowners with mortgages not owned by Fannie or Freddie. Proposals are being considered to help. President Obama was selling refinancing in his recent jobs speech. I have noticed a bigger effort from my company, PHH Home Loans and Coldwell Banker Home Loans to originate HARP refinances. If you had bought your house prior to July 2009 with a mortgage from PHH or CBHL, get in touch with me to see if we can save you some money! Those borrowers I have helped have saved an average of more than $125 per month! I’m David Wolsky and can be reached at (520) 275-2536 or david@davidwolsky.com.

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.

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.

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.

Rates are trending higher. Don’t miss the train. If you have not refinanced yet, this may be a great opportunity to do so. We are offering a $350 discount for closing costs in February whether you are purchasing or refinancing!

Call me at 520-275-2536 or email David Wolsky @david@davidwolsky.com for details on how PHH Home Loans can save you money every month on your next mortgage! Licensed in Arizona. NMLS#182108.

I was in Miami recently visiting relatives and read an article in the Miami Herald about creative ways to buy a home. They recommended a FHA loan as the best way to buy. It is a great loan program for buyers with a minimal down payment of only 3.5%. The source of funds can even be a gift. With a 620 minimum credit score and maximum loan amount of $316,250 in Pima County, Arizona, a FHA loan is the right choice for the majority of home buyers. FHA did make recent changes pertaining to underwriting guidelines including, the minimum credit scores and mortgage insurance premiums.

Another suggestion is a private loan. Now that institutional loans have such strict underwriting guidelines, private lenders typically can make up the rules to match your needs.  In most cases, you can expect higher interest rates, higher closing costs and greater down payments. Most mortgage brokers have private investors willing to make these deals happen. Another funding resource could be a family member. Hopefully, you have a rich uncle!

Another creative approach is a seller carry back. Some institutional lenders allow a second position mortgage behind a new first mortgage a borrower obtains to buy a home. For example, the seller owns their house free and clear or they have ample equity in their house. The buyer obtains a loan for 80% of the sales price and the seller is the second position lender with a 10% loan for a combined loan-to-value ratio of 90%. Or, the seller can also be a private lender by accepting a down payment and financing the difference. If the buyer defaults, the seller keeps the down payment and gets the house back to sell it again!

The two zero down options still being offered are VA loans for active military or vets and USDA loans for rural housing. You might be surprised to learn that rural area near Tucson includes Vail, Marana and Sahuarita.  USDA loans require borrowers to have an income no higher than 115% of the median income in the area. In Pima County, you can earn up to $73,000 for the household to qualify.

This seems to be a great time to get back in the housing market thanks to the lowest rates since the Eisenhower administration and affordable housing prices. I’m David Wolsky and I can be reached for advice at 520-275-2536. I am fully licensed in Arizona at PHH Home Loans (also known as Coldwell Banker Home Loans). Email me at david@davidwolsky.com.

Tucson is a great place to live! I visited “The Old Pueblo” for the first time in 1978 and immediately fell in love with the desert as I went through Gates Pass on my way to the Arizona Sonoran Desert Museum. I came back year after year. In 1994, my family and I moved here and I joined the mortgage industry which connected me to home buyers relocating here from all over the world. I have been sharing my zeal for Tucson with anyone in earshot for these last 16 years and counting!

CNNmoney.com recognized Tucson as one of the top locations to buy a retirement home in their recent article, Best Places to Retire.

You probably know that Tucson has 350 days of sunshine, more than two dozen golf courses designed by the likes of Tom Fazio and Jack Nicklaus, and some of the best Southwest cuisine this side of the border.

What you might not know is that Tucson is surrounded by four different mountain ranges, and there’s even skiing at nearby Mount Lemmon. The city has a wealth of historic places to explore, from the 19th century St. Augustine Cathedral to the old homes and store fronts in El Presidio. Just outside of Tucson, you can visit old mining towns, missions and archaeological sites, including the petroglyphs at Signal Hill and the reconstructed dwelling as Dankworth Village. When temperatures get too brutal for outdoor pursuits, such as hiking the 150 miles of trails in the Santa Catalina Mountains, you can always hop in a summer class with the University of Arizona at Tucson’s lifelong learning program. There’s even a course on pirates!

Tucson was also featured in the article “Where to Buy a Retirement Home for Under $600 a Month” provided to Yahoo by U. S. News and World Report.

With 350 days of sunshine a year, Tucson residents don’t have any excuses for staying indoors. Retirees can hike through the five surrounding mountain ranges, explore a nearby cave, visit a Native American archaeological dig, or check out the Center for Creative Photography. The median home price in Tucson declined 14 percent, to $150,000, from the second quarter of 2009 to the same period of 2010. Buyers that put 20 percent–or $30,000–down on a median-priced Tucson home will pay roughly $599 a month in mortgage principal and interest payments.

If you would like to know more about Tucson, call me, David Wolsky at 520-275-2535 or email me at david@davidwolsky.com. It would love to talk to you about Arizona and to help you buy your next home.

FHA has some good news and bad news for borrowers. The good news is lower UFMIP – Up Front Mortgage Insurance Premium. The new rate is 1% down from 2.25%. The bad news is the MIP – mortgage insurance premiums are now .9% (per year) up from .55% for loans of 95% to 96.5% of the sales price. The MIP is .85% for loans with a down payment greater than 5%. This change represents about $30 more per month for a $150,000 loan amount. The hits just keep on coming!

Call David Wolsky at 520-275-2536 to help you through the mortgage maze!

I got a call the other day from a potential client interested in refinancing his home. He was trying to modify his loan and the lender suggested that he stopped making payments because the banks will not even talk to you about modifying a loan that is getting paid on a timely basis. Of course, their credit is shot now and they cannot qualify for a refinance despite the record low interest rates. I get calls like these every week. Why can’t everyone refinance their homes with record low interest rates?

1. Many homeowners have lost all of their equity or are underwater (owing more than the current value of their homes). Nationally, about 25% of homeowners fall into this category. In Tucson, over 30% of homeowners are underwater and in Phoenix, sources estimate over 50% fall into this category.

2. I am finding that some potential clients will pay for an appraisal, only to find out the appraiser has given the property a low value. Although there might be equity, it may not be enough to refinance.

3. Underwriting guidelines are very stringent. Many borrowers obtained their home loans with alternative document loans such as stated income loans, no document mortgages or no ratio mortgages. These products do not exist in the current mortgage marketplace. As a result, these same borrowers cannot refinance their loans because they cannot verify their income or assets.

4. Your credit is shot! About 25% of Americans have badly damaged credit. They have walked away from home loans and credit card debt. Bankruptcies are on the rise. Thousands of homes are foreclosed every day!!!

5. Another road block to refinancing is home equity lines in second position behind your current first mortgage. The combined loan-to-value ratio (CLTV) is very high in many cases. Lending guidelines cap CLTV especially in declining markets such as Arizona. Even if you have sufficient equity in your home, the second mortgage lenders are inundated with requests to subordinate their equity lines behind new first mortgages.

Despite these challenges, many borrowers are able to refinance their homes because they have the right combination of Good to excellent credit, income and asset qualifications and equity in their homes. Others may qualify for a program to help folks without enough equity if their home loans are owned by Fannie Mae or Freddie Mac.

If you are endeavoring to refinance, please be patient during the process as the system is at its capacity. I have heard that the three biggest banks in the country are taking over 90 days to process refinances. The residential mortgage industry has significantly consolidated over the past three and a half years as the economy was melting down. Of the top 25 lenders in 2008, only eight still exist! Also, lenders prioritize purchase transactions, so a refinance may have to go on the back burner. The best scenario for refinancing is to have your income and asset documentation available at the time of application. You will be required to submit your  two most recent income tax returns with all schedules, your two most recent W2s, if applicable and your two most recent bank and investment statements. If you own more than one home, be prepared to provide the complete housing expense documentation of house payments, taxes, insurance and home owners association fees, if any. Appraisals can take a week or two to complete. They are ordered through the lender’s appraisal management service. Be truthful on your application and hang in there! Be extra patient if you have a second mortgage or equity line and you want to keep it subordinated to your new first mortgage because you will add several weeks onto the transaction. Work with professionals! I’m David Wolsky, fully licensed in Arizona with over sixteen years of experience. I can be reached at david@davidwolsky.com or by calling 520-275-2536.