Bill McCord's Blog

A large increase in Mortgage loan applications for Buyers is another strong sign that the market is getting back to normal in many parts of the Country. Overall the number of applications for mid February to mid March was  22% greater then for the same period last year.

When added to the recent large increase in the number of Pending sales contracts this bodes well for a much stronger market overall.

Not just a Mortgage Issue

 Most people know that your Credit Score (FICO) has a significant effect on whether you can get a Mortgage.

What is not generally known is that FICO is increasingly being used by Employers, Insurance Companies,

Utility Companies, Apartment Complexes and a growing list of other organization which provide services for regular payments.

These and many other groups consider it a good indicator of general reliability and whether bills will be paid on time.

The Best Home Loan News of The Year.

How about a mortgage loan program that GIVES you up front 3% of the price of the home you want to buy, and that:

0 Never has to be paid back.

0 Is NOT limited to 1^st time buyers.

0 Works with FHA and V/A loans.

0 Down to 620 credit scores.

Here’s a simple example:

Tom and Jenny earn $6,300 per month between them, and over the past year have saved $5,000 toward the down payment on a house they love priced at $300,000. Therefore the lowest possible down payment allowed is 3.5% of that price i.e. $10,500

Add in reasonable closing costs of 1.5% ($4,500) and they are about 2 years away from being able to buy.

Using the CHF program they will receive a grant for $9,000, add in their current cash of $5,000 and they are Ready to Buy right NOW.

I think this would qualify as good news for Tom and Jenny, and  many other wanna-be homeowners in similar situations.

If you would like more information contact me at bmccord@rwnetwork.com or http://www.nhfloan.org/programs/CHF_Platinum/Guide_CHF_Platinum.html 

The following is a result of a recent inquiry from a subscriber to the Trulia Voices website. He wanted my opinion on a purchase he was considering. He had picked up a lot of useful information but did not have the experience of the actual steps involved which allows an expert to place multiple bits of knowledge into a clear context, and then into a plan.

                                                             ____________ — _______________

Hello James,

        You are obviously doing a lot of homework yourself, as I would prior to deciding on alternate strategies for a medical problem. However, in both cases accurate information is required in order to make the optimal decision.

I believe you have reached the point of needing accurate current data, placed in its correct context, in order to decide how to proceed.

For example, let’s look at the scenario you described in your question.

Purchase price – $360,000

Loan $288,000 – o.k.

20% down – o.k. but maybe not the best choice, as you are already aware.

6.00% interest – Wrong. Worst case is 5%. (A $200 per month difference in payment)

Property Taxes about $300 per month – Wrong. On $375,000 will be $390:63 per month. A $90:63 difference.

Hazard Insurance $100/m – Wrong. $60 per month is a good estimate. A $40 per month difference.

Just these few differences would allow you to buy up to $400,000 for the same monthly cost. This takes you into the Piedmont High School district with its much superior education system.

You’ve taken the time to build your knowledge and vocabulary well. Now you need real facts and numbers in order to become an educated buyer in a market place where getting it wrong can be very expensive.

I’m not going to base important decisions about my health on “free” research and advice from the Web. I want the alternatives to be explained by a professional, and specifically as they apply to me, not some mythical Mr. Average.

I suggest you take a similar approach and hire a Realtor who will explain the options available to you, and help you understand the pro’s and con’s of each one.

Sorry if this seems “preachy” but I feel very strongly about the mass of incorrect and misleading advice and information being spread throughout Radio, T/V, “News”papers, Magazines, and the Internet. These sources are not interested in supplying information relevant to you and your situation. Their sole motivation is to sell advertising.

Why not hire your own professional who can advise and inform you based on your unique circumstances, at this specific time, and with regard to your medium and loan term plans.

Here’s one more example of a Bank pretending to do something positive about loans to defaulting Sub-Prime borrowers, while actually increasing their payments.

While 90% of mortgage lenders resist  handing out any type of loan modifications, despite being advised and even pressured by the government to do so, Bank of America claims it is now taking the lead. The initial B of A model seeks to conditionally (read: unlikely) cut up to 30% off the principal of 45,000 home mortgages nationally. Note: This is not the same as a reduced payment.

This program is very limited in breadth and scope. It applies only to those homeowners with negative amortizing ARM’s.  The principal reduction program will not be available to underwater homeowners with fixed rate mortgages or ARMs with amortized payment schedules. B of A claims their goal is to reduce homeowners’ monthly payments to an amount equal to 31% of their household income – the parameter set by the federal government two years ago, in 2008, based on long-standing fundamentals of mortgage lending.

In practise this program will apply only a few of the loans B of A inherited when it took over Countyrywide; specifically (negative amortization loans), where the Borrower is at least 60 days late!!

A more important problem is that the proposed modifications will usually result in a HIGHER MONTHLY PAYMENT for people already unable to make the current minimal payment.

For a delailed analysis of this Public Relations Excercise check http://blog.firsttuesdayjournal.com/2010/04/lenders-attempt-to-lock-homeowners-into-paying-underwater-homes/

Speaking as a Realtor I should welcome the new California tax credit for certain homebuyers. Instead I condemn it as nothing more than a subsidy for lenders, the building industry and the brokers/agents (including me) handling their transactions.

California is a virtually bankrupt State with the 3^rd worst educational system in the Country.

To be allocating $200 million to such a program, while simultaneously imposing huge cuts on education, seems to me the height of irresponsibility.

In practice this program will chiefly benefit people who would be buying anyway, and steer them toward new construction. I don’t see this as anything Realtors should be cheering about.

Banks and Builders however are welcoming it with huge sighs of relief.

Just my opinion.

There are many different Business Models in the Real Estate Industry. Here’s just a few examples:

1. Buyer Only Brokers.

2. Buyer Rebate (Kick Back) Brokers.

3. Virtual Office Brokers. No physical location.

4. Reduced Commision Brokers.

5. Fixed Price Brokers.

6. Transaction Facilitation Brokers.

Etc, etc.etc ad infinitum.

All of these and many more are proof that we have a lot of competition in our business, and that the Consumer (Buyer or Seller) has lots of choices.

I won’t try to explain the pro’s and con’s of any of these options, but will strongly suggest that whichever of them you choose you  strongly consider working with a REALTOR.

My reason for this specific advice is as follows:

1. There are more than Half a Million Licensed Real Estate Agents in California. This is the minimum required qualification for the job.

2. Only 165,000 of them are REALTORS who have voluntarily agreed to subscribe to a strict Code of Ethics, and are paying members of their Local, State, and National Associations of Realtors.

Amongst many other services Realtors provide to the public is the web site Realtor.com. the most popular of all on-line Real Estate sites. Check out http://www.realtor.com/.

There are many suggestions being made as to how best to deal with homeowners in trouble with their mortgage payment. Some are constructive and worth pushing for. Others are not.

One of these is the proposal to allow a bankruptcy judge to force a bank to reduce the Pincipal amount of the mortgage. This is called a “cram down”.

Rather than giving this power of “Cram Down” to bankrupcy courts” (most “distressed” homeowners do not, and will not want to go the bankrupcy path), I’d rather see the Real Estate and Media industries praising and fighting for the Wells Fargo strategy for dealing with their Wachovia inheritance.

They are actively using Principal Reduction “Cram Down” along with Loan Modification strategies, usually  together, to provide long term solutions to many of their defaulting loans.

With a long history of prudent and pragmatic lending policies Wells Fargo are an excellent example of what the banks could and should be doing to make it possible for responsible homeowners to stay in their homes. By lowering the loan amount and interest rate they minimize the larger loss which they would take in a foreclosure or short sale.

 the short sighted strategies being used by the majority of other banks with similar problems are best described as  re-arranging the deckchairs on the Titanic.

I won’t try to explain the pro’s and con’s of any of these options, but will strongly suggest that whichever of them you choose, you consider working with a REALTOR. My reason for this specific advice is as follows:

 

1. There are more than Half a Million Licensed Real Estate Agents in California. This is the minimum required qualification for the job.

2. Only 165,000 of them are REALTORS who have voluntarily agreed to subscribe to a strict Code of Ethics, and are paying members of their Local, State, and National Associations of Realtors.

Amongst many other services Realtors provide to the public is the web site Realtor.com. the most popular of all on-line Real Estate sites. Check out http://www.realtor.com/.

Here we are at the start of the annual self flagellation period otherwise know as Tax Preperation Time.
Given the amount of bad/wrong advice freely floating around on this topic you might find it helpfull to see what the rules really are as the I.R.S. sees it.
Check out this link: http://www.irs.gov/pub/irs-pdf/p936.pdf