Will Interest Rates Go Lower? Yes. Here is Why.

December 31, 2008 2 Comments

Will Interest Rates Go To 4.5%?

We have been asked that question often recently. Normally, when people ask us “what is going to happen with interest rates” we usually reply with “well, one of three things can happen:

They can go up
They can go down, or…
They can stay the same.”

If you asked me the question today of “are interest rates going to go down?” my answer now is “yes, interest rates will go down in the near term and here is why…”

Interest Rates Will Go Lower

The Federal Reserve released implementation details on its previously announced program to purchase mortgage-backed securities. This is a drastic new step that the government has taken in an effort to keep mortgage rates low, which in theory will spur demand and help increase home sales numbers as well as provide some help to those homeowners who are currently struggling to make their house payment.

Only fixed-rate Mortgage Backed Securities that are guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae are eligible for purchase. Other products such as adjustable rate mortgages, jumbo loans, and structured bonds are excluded.

Purchases are expected to begin as soon as next week and up to $500 billion will be bought. This $500 billion is in addition to the current Treasury’s agency Mortgage Backed Securities purchase program which has been running at $20-25 billion in recent months.

$500 billion is a huge number — probably big enough to cover most of the 2009 mortgage backed securities agency supply for 2009 and so it is difficult for me to see how mortgage rates don’t go lower – possibly solidly into the 4% range that everyone seems to be talking about.

Will Mortgage Rates Go Lower?

Yes.

And I reserve the right to be wrong. Right along with all of the other “experts” that you see on CNBC.

Happy New Year!

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Filed Under: Interest Rates Tagged With: Interest Rates

How Do FHA Loans Work? 2009 FHA Loan Limits

December 29, 2008 2 Comments

After learning all about MIP/UFMIP in our first “How do FHA loans work?” series, our second installment covers the FHA loan limits in Arizona. I think that it is fair to say that the new 2009 FHA loan limits in Arizona can be summarized in one word:

Lower.

The FHA loan limits in Arizona for 2009 are:

Coconino County $333,500
Maricopa County $271,050
All Other Counties $271,050

These numbers represent a significant drop from 2008′s $346,250 – and we expect there to be some price adjustments accordingly. If a house was priced at $285,000 in 2008 – I imagine there would be more than one conversation between the seller and their Realtor about dropping the price down to the 2009 FHA loan limit of $271,050.

The 2009 conventional loan limit will remain the same for 2009 – $417,000 in all of Arizona except for Coconino county where it will be $450,000.

See HUD’s official mortgagee letter outlining 2009 FHA loan limits.

UPDATE: NEW ARIZONA FHA LOAN LIMITS FOR 2009

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Arizona Mortgage Experts? 7 Things About Us That Have Nothing To Do With Mortgages

December 26, 2008 9 Comments

Our friend Steve Belt tagged us this week with a challenge to list out 7 things about us.

Ok, really – he tagged me, but I thought I would drag Tammy into the mud with me since I was gonna dish some dirt…

1. Tammy and I both grew up in Flagstaff and met when we were 11 playing little league baseball. Tammy played right field and used to pull the brim of her hat down so that you could barely see her eyes. We went to the same grade school, middle school, high school and college. Tammy got pretty much straight A’s through all of them, I accidentally graduated and learned the concept that 90% of life is just showing up and being generally interested in what the teacher was talking about. If you show up and kind of pay attention, you might accidentally graduate!

2. I have been fired from a job. Tammy hasn’t. I used to worry about getting fired being a bad thing until it actually happened to me. The guy who owned the company that fired me taught me (before I was fired of course) that you hadn’t actually lived until you had been fired from a job. Check that one off for me, apparently Tammy hasn’t lived yet. Wondering why I got fired? Ask me. I used to stress out about it, but crisis + time = humor.

3. Tammy does two things every day for at least the last 20 years: work out for 1 hour before 7 am and eat a cup of frozen yogurt before bedtime. I do neither of those two things – but I watch football on TV and eat popcorn and drink beer with my friends on a regular basis. I really wish I could work out for 1 hour at any hour of the day. The yogurt I could live without.

4. I am not allowed to vacuum the carpet because I can’t “make the lines straight enough” so Tammy does the vacuuming… and pretty much all of the other cleaning too. Now that I think about it, I probably should not be writing this one down because I have a feeling that it is going to haunt me.

5. I learned how to golf by working on the local golf course in Flagstaff — we would work in the early morning and then golf in the afternoon. Tammy doesn’t golf and used to get mad at me when I would tell her “the golf course is no place for a woman”. I don’t think she ever knew that I was kidding. Am I a good golfer? Absolutely. I am the greatest player in the world from the rough… because I am always in it. I am good for at least one amazing shot per 18 holes and usually shoot in the 80′s or 90′s.

6. Since we have been married, every Sunday morning we cut out the coupons from the Sunday paper. Now that we have kids, Tammy just marks which ones to cut out and our 9 year old and 4 year old get to/have to cut them out. Our 4 year old loves to do it, our 9 year old hates it. Maybe in another 5 years our 4 year old will hate it too and it will be back to me and Tammy doing it. It is not uncommon for Tammy to save 75% on a grocery bill — yes, you read that right — seventy-five-percent.

7. For our honeymoon, we were supposed to go to Hawaii, but we were too broke so we promised that we would go later. 15 years later, we still haven’t went but it is still on our list of stuff to do before we die.

Ok, so I hit “publish” before getting any of this approved through Tammy so if this is the last you hear from me, it probably has to do with me opening my mouth about #4, #5 or #7. Also, I may be needing a place to sleep for a while.

Steve said I’m supposed to post the rules, so here they are:

Link your original tagger(s) and list these rules in your post.
Share seven facts about yourself in the post.
Tag seven people at the end of your post by leaving their names and the links to their blogs.
Let them know they’ve been tagged.

And I just can’t wait for these 7 individuals to tell all about themselves.

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Filed Under: Miscellaneous Fun

FHA Loan Options For First Time Home Buyers In Arizona

December 26, 2008 1 Comment

Are you thinking about or in the process of buying your first home?

Congratulations!

In terms of “is now a good time to buy or not” I think you will probably look back in 5 years and be glad you moved when you did.

One of the most common questions we get from first time home buyers is “what does it take to qualify for a loan?” so I thought I would outline the qualification criteria for one of the most popular programs available for first time home buyers — the FHA loan program.

FHA Loan Programs: 3 Basic Choices

The most popular loan option for first time home buyers is the traditional FHA loan. In recent years as other mortgage programs have been eliminated by lenders, the FHA loan is now as popular as it ever has been.

With FHA loans, you have a choice of 3 basic loan programs, the 1 year adjustable rate loan, a hybrid adjustable rate loan and the 30 year fixed rate loan. Right now, the FHA 30 year fixed rate loans are by far the most popular option because fixed rates are close to the same interest rate as the adjustable ones are – and sometimes even lower!

FHA Loan Programs: What It Takes To Qualify

FHA has long been known for it’s flexible underwriting standards – meaning if you are not approved though the computerized automated underwriting system, a FHA-approved underwriter can look at your file and manually approve it based on a number of factors that the computer couldn’t account for.

In general, in order to be approved for an FHA loan in today’s market, the following apply:

Need enough money for the 3.5% down payment requirement
Need above a 580 middle credit score for all borrowers
Must plan to live in the home as your primary residence
Must have employment history for at least 2 years, preferably at the same job or in the same field
Must be able to document your income through W2′s/paystubs or tax returns
New mortgage payment should be *approximately* 30% of your gross income

These are the basic FHA qualifying criteria – if you answer most of these with a “yes, I have that” there is a good chance that we can help you get qualified for an FHA loan so that you can take advantage of this buyers market and get into that first house you have been working towards.

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Filed Under: Arizona Home Financing Options, Buying a New Home in Arizona Tagged With: FHA First Time Homebuyer, FHA Information

Streamlined Loan Modification Program Announced

December 22, 2008 3 Comments

Many times when I speak with someone about the “rules of loan modification”, I explain that there really are no rules – that the process varies from lender to lender.

With the announcement of a new “Streamlined Loan Modification Program” from the government, I suspect that the rules of loan modification will become more clear for many people.

Fannie Mae has been working with FHFA and 27 different lenders and servicers in the HOPE NOW alliance to implement the Streamlined Loan Modification Program – so there is a great chance that your lender is participating.

Under the Streamlined Loan Modification Program, your mortgage and escrow payments can be cut to 38 percent or less of an eligible borrower’s gross monthly income by some combination of:

reducing mortgage rates
extending the mortgage term up to 40 years
forbearing on a part of the principal amount until the loan is paid off, then a balloon payment is required

Streamlined Loan Modification Program Eligibility Requirements

You must own and occupy the property as your primary residence
You must have missed at least three mortgage payments
You cannot have filed for bankruptcy

Streamlined Loan Modification Process – Trial Period

The streamlined process allows you to sign a single document at the outset of the modification process that establishes a new monthly payment during a three-month trial period, and also sets forth the modification terms that will be permanent if you make the modified payments during the trial period.

Who To Contact about the Streamlined Loan Modification Program

Borrowers should contact their servicers if they think they may qualify. At the same time, servicers will be identifying eligible borrowers and reaching out to them through the mail.

If an affordable payment cannot be achieved through the Streamlined Modification Program, lenders will still be working with people through the “traditional” modification process — or in other words, every situation is different and will be handled differently.

Learn How To Get Your Loan Modified On Your Own Without The Help Of An Attorney

Other Streamlined Loan Modification Program Official Press Releases

Federal Housing Finance Agency Press Release

Freddie Mac

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Filed Under: Loan Modification Tagged With: Arizona Loan Modification, Arizona Loan Modifications, Loan Modification

How Do FHA Loans Work? MIP and UFMIP Explained

December 20, 2008 8 Comments

Lately, I have talked to quite a few people who open the conversation with something to the effect of “How Do FHA Loans Work?” I thought I would take some time to explain how FHA loans “work” in a series of posts and highlight some of the differences between FHA loans and other types of loans.

This will be an ongoing “How Do FHA Loans Work” series with random updates.

Today’s installment of “How Do FHA Loans Work?” comes from a conversation I had yesterday who asked me “How does MIP work?”

What is MIP? What is UFMIP? What is MI?

When you take out an FHA loan, you are required to pay what is called an Up Front Mortgage Insurance Premium (UFMIP). Currently, the UFMIP requirement is between 1.5% (FHA Streamlines) and 3% (FHA Secure) of the loan amount (this amount changes from time to time). This money is taken and put into an escrow account at the US Treasury and is proportionately distributed to HUD on a monthly basis in case you default on your loan. This UFMIP does not benefit you as a borrower — it benefits the lender in that it protects the lender against mortgage loss because FHA pays the lender directly if the property is foreclosed and a claim is filed.

In addition to the UFMIP that you will be required to pay when you take out an FHA loan, you will also be required to pay Monthly Mortgage Insurance – commonly referred to as “MI”. Currently this MI is .0055% of your total loan amount broken out on a monthly basis. So for a loan amount of $100,000, the monthly MI would be $100,000 x .0055 /12 or about $46 per month..

MIP is the common reference to the UFMIP account once it is set up – and if you have had an FHA loan in the past, you may actually be entitled to an MIP refund. HUD has done a very nice job of making it easy to find out if you are due an MIP refund by making a search section on their website.

MIP Refund vs MIP Credit

When you participate in the FHA Streamline program, you will be required to set up a new UFMIP account (as always) with your new FHA loan. The nice thing about going from one FHA loan into another FHA loan is that HUD will actually give you a credit for whatever is left in your old MIP account towards setting up your new UFMIP account. So, in other words – if you have $1,500 in your old MIP account and your new UFMIP that is required on your new loan is $$2,000 – HUD will credit you $1,500 toward the $2,000 so you will only be required to pay an additional $500.

An MIP refund is different than an MIP credit – an MIP refund actually comes in the form of a check after you fill out the required paperwork if you are due an MIP refund. Again, it is easy to find out if you are due an MIP refund thanks to the search section on HUD’s website.

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Filed Under: FHA Loans Tagged With: MI, MIP, MIP Refund, UFMIP

Arizona Loan Officers: Things Great Loan Officers Do

December 19, 2008 2 Comments

In baseball, what is the difference between a hall of fame hitter and someone that is easily forgotten? Not much. A hall of fame hitter might have a career lifetime average of .333 and a run-of-the-mill big league player might have a lifetime average of .250 – seemingly not that much of a difference to someone who isn’t familiar with the difficulty of hitting.

Luckily, when it comes to loan officers, it is usually easier to spot the good ones from the bad ones if you know what to look for. If you are looking for an Arizona loan officer, here are just a few things that the great Arizona loan officers do:

Great Loan Officers Listen First

In your first conversation with your loan officer, you should be prepared to do most of the talking. If you find your loan officer doing most of the talking, that usually means he hasn’t taken enough time to understand your unique situation. Great loan officers will know the right questions to ask, and then how your answers to those questions dictate the next set of questions relating to your answer.

Great Loan Officers Have Experience

In Malcom Gladwell’s book “Outliers”, he says that to truly be world class at something, you generally had to be good at it to begin with and then spend approximately 10,000 hours perfecting that skill. I don’t know exactly at what point a loan officer becomes “experienced” — but it is probably safe to say that if they are measuring their experience in the mortgage business by weeks or months rather than by years, they are probably not great loan officers yet. I can see how it could be possible to be green and good, but not green and great.

Great Loan Officers Communicate Effectively

The process of getting a mortgage generally takes somewhere between a couple of weeks and a month. During this time, you might actually talk with your loan officer a small handful of times – but there are many people “behind the scenes” that are working on your file. Great loan officers will keep you updated throughout the process — even when you don’t need to actually do anything. You should find yourself getting quite a few emails that start out by saying something like “hey, just thought you would like to know…” and then give you a quick update as to the status of your file.

Great Loan Officers Tell You What To Expect – Up Front

The mortgage process itself is relatively the same from lender to lender – it really hasn’t changed all that much in years. But the timeframes that each step of the mortgage process takes changes on a regular basis and great loan officers set your expectations up front about the time and process that getting a mortgage will take.

What if you don’t personally know a great Arizona loan officer? Our best advice is to:

Lastly, since we happen to be in the mortgage business right here in Arizona, we thought we would take the time to distribute information on some great, local, Arizona loan officers. Sure, there are many great Arizona loan officers – and as we meet more of them, the list will grow!

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Filed Under: The Business of Mortgages Tagged With: Arizona Loan Officers

The Fed Lowers Rates to Zero: Where Did All The Loan Officers Go?

December 17, 2008 1 Comment

Yesterday, the Federal Reserve lowered its key federal funds rate to “a target” of 0-.25%. Combine this with the Feds commitment to buying mortgage backed securities from Fannie Mae and Freddie Mac and I think it might be safe to say that rates are probably going to trend lower for a period of time.

Which means that there is probably going to be quite a few people who are going to want to refinance — all at once!

Having seen a boom cycle and a bust cycle in the mortgage industry, here are just a few things that you can reasonably expect when refinancing:

Your loan will probably take longer than it “normally” would. Lenders will be backed up because they have reduced staff over the last year and there simply isn’t enough operations staff to handle the crush of files.

It won’t just be the operations staff who will be over-worked, vendors such as title companies, appraisers, inspectors – they are probably going to watch their workloads increase dramatically.

It is probably going to be harder to find a loan officer to help you – you may even have to *search* for one… there just aren’t that many left!

Be ready to document your income. If the last time you thought about your mortgage was a couple of years ago, guidelines have changed since then — there is no such thing as “stated income” loans in today’s mortgage market.

Be ready for the underwriting department to ask for more documentation or additional information of all kinds — such as an extra month’s bank statements, more comparable sales information on the appraisal, etc. Underwriters are being more careful and critical than they have been in the past.

Be ready to refinance more than once. Ok, so maybe this won’t happen – but if the general trend of interest rates is down for a period of time, it can often make sense to refinance more than once as interest rates drop.

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Filed Under: Arizona Home Financing Options, The Business of Mortgages

Arizona Loan Modification: Who Do I Call?

December 15, 2008 3 Comments

“Who do I call to help me with a loan modification if you don’t do them?”

I get asked this question no less than 5 times each day.

Usually, it is followed by a brief explanation of how I would be happy to pass on a few people that I have heard do a good job of helping borrowers stay in their homes by working with their lender… but we in no way endorse nor receive anything from these companies for referring people to them.

At this point, I usually gather the persons email and then type out an email with a few of the contacts that I can gather up of people that they can contact for help.

So I thought I would start a list of people who currently work in the loan modification business and at some point have somehow come across my path.

Just so you don’t miss it, I will put it in big red letters…

For a list of loan modification companies who could possibly help you depending on your situation:

—-> Arizona Loan Modification Contacts<—-

You can also get your loan modified without the help of an Attorney if you know what you are doing…

Learn How To Get Your Loan Modified On Your Own Without The Help Of An Attorney

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Filed Under: Loan Modification Tagged With: Arizona Loan Modification, Arizona Loan Modifications, Loan Modification

Will Interest Rates Go Lower? Yes. Here is Why.

How Do FHA Loans Work? 2009 FHA Loan Limits

Arizona Mortgage Experts? 7 Things About Us That Have Nothing To Do With Mortgages

FHA Loan Options For First Time Home Buyers In Arizona

Streamlined Loan Modification Program Announced

How Do FHA Loans Work? MIP and UFMIP Explained

Arizona Loan Officers: Things Great Loan Officers Do

The Fed Lowers Rates to Zero: Where Did All The Loan Officers Go?

Arizona Loan Modification: Who Do I Call?

—-> Arizona Loan Modification Contacts<—-

Loan Officer Hotline: 480-406-5678

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