This week I received some very valuable feedback from a realtor that said she got the feeling from reading some of my previous commentaries that loans are impossible to obtain, and it might discourage buyers from buying right now. (Thank you so much, you know who you are!). I welcome feedback always, so please don't be shy.
By nature, I am one of those 'people' that always finds the silver lining- positive outlook, and neutral ground. No wonder- I'm a middle child. So believe me, my intention has never been to be down on the home buying market. HOWEVER, I refuse to sugar coat the facts. And this could be mis-interpreted by some as negative. My goal is to acknowledge REALITY, and find a positive outcome, so we can get through these difficult times. I try to accomplish this by giving you, the realtors, information that is truly happening - Letting you into the world that lenders live in, so that possibly it can enhance our working relationship to continue to accomplish the dream of homeownership for our clients.
I've said this before, and I will state it again. THERE IS LOTS OF MONEY OUT THERE TO BORROW.......if.......you have (a) good/excellent credit, (b) can prove your income, and (c) have money for a down payment and reserves, and (d) if you give us time to work through any unique situations. Now that doesn't sound so hard, does it? Well, it still is challenging for many people, after a 5-6 year run of 100% loans, low documentation, and subprime credit programs. We have short memories. Some borrowers are having a hard time facing the reality of current times. Lending has gone back to the way it was when I entered the business in 1995, with a 'twist' of some extremes, but for the most part, conservative decision making. Now there are some unfair practices, I must admit (like the credit scoring system- please don't get me started). However, I'm just the messenger.
There are some borrowers that fall into gray areas (example: self employed), but we do try to work with them all we can. You may have to file on time taxes or even early, if you need 09 income to qualify. We may want an audited profit and loss statement. Every situation is unique. One borrower made a really great comment to me once. He was a business owner, and said that he found it hard to believe lenders cannot realize that the stability of a business owner is more solid that a W-2 employee. The business owner will do whatever it takes to save his business, and earn his living. Very good point, Mr. Borrower. But unfortunately, the purse strings (lenders) don't see it that way.
So as is my nature, I would like to leave you with a thought of something positive amidst this era of change and uncertainty: If it makes sense for you to buy now, do it. Get qualified early, to avoid any pitfalls. Be sure your lender (like Patriot Bank Mortgage) has several investors they work with, so that if you have a unique situation, there is a backup plan (hint: B of A, Wells, Citi, and Chase ALL have different guidelines for self employed borrowers). And if you cannot buy now for some reason (ex: don't qualify) - buckle down, save, and get your finances in order. Your day will come. But you won't know until you TRY. We will help you make a plan, and set goals for that home to be yours.
Enjoy the weekend!
Friday, February 19, 2010
Tuesday, February 16, 2010
Paper trails
I am convinced we will never be a paperless society. This week I had several closings, and the amount of paperwork each year seems to have gotten larger and larger! HVCC added 2 documents to our application, and this year, the new GFE has added 4 pages to our application, and 2 pages to the title company documents. I wonder how many trees that is? So, paperless………… no way.
What about the paper created/wasted with all the foreclosures and short sales? Just imagine ALL that paper floating around, from realtor to bank, to appraiser to realtor to bank again. It’s amazing. And legislators are trying to save the consumers money. All this paperwork, and cost, and compliance, must come from somewhere. Do you want to know how? The end cost to the consumer eventually, if it has not already, will be passed on to the consumer. Higher fees, higher rates, or a combo of the two.
The stock market rallied a lot this week, and for reasons you may not expect. Greece is on the brink of a financial collapse. Who would have thought? And the news of the EU coming to its aid affected the stock market as much as 4% as stocks rallied back and forth with mixed emotions at the news. China announced it will tighten its lending guidelines to slow the country’s economic grown and avoid inflation. Stocks did not like the news – good news for bonds. US treasuries were not well received at the auction- translation- no one wants to buy our debt! Maybe ‘no one’ is a strong word. Weak demand might be better said. So this week we had a lot of ups/downs. The takeaway here is that there are SO MANY factors that determine interest rates. When your time comes (or your clients) to commit to a lender and lock a loan, they should not ‘dily daly ‘ (as I tell my 4 yr old)- they should lock, and forget about the potential emotion of the thought of a lower rate.
An interesting headline for you that was on CNN Money this morning: “Eight million in assets-and can’t get a mortgage”. Some statistics that you may find interesting: 12% of US mortgages > 1 mm are delinquent. That is triple of one year ago. Assets don’t count for much anymore. Jumbo lenders are skiddish. It’s all about credit, equity, and ability to repay (monthly income). Assets come and go. People spend money (what if this borrower decided tomorrow to give all his money to charity? Money is gone………so we look for monthly income (that is likely to continue) for purpose of debt to income ratio. Tax returns, and full disclosure. We really want to know.
What about the paper created/wasted with all the foreclosures and short sales? Just imagine ALL that paper floating around, from realtor to bank, to appraiser to realtor to bank again. It’s amazing. And legislators are trying to save the consumers money. All this paperwork, and cost, and compliance, must come from somewhere. Do you want to know how? The end cost to the consumer eventually, if it has not already, will be passed on to the consumer. Higher fees, higher rates, or a combo of the two.
The stock market rallied a lot this week, and for reasons you may not expect. Greece is on the brink of a financial collapse. Who would have thought? And the news of the EU coming to its aid affected the stock market as much as 4% as stocks rallied back and forth with mixed emotions at the news. China announced it will tighten its lending guidelines to slow the country’s economic grown and avoid inflation. Stocks did not like the news – good news for bonds. US treasuries were not well received at the auction- translation- no one wants to buy our debt! Maybe ‘no one’ is a strong word. Weak demand might be better said. So this week we had a lot of ups/downs. The takeaway here is that there are SO MANY factors that determine interest rates. When your time comes (or your clients) to commit to a lender and lock a loan, they should not ‘dily daly ‘ (as I tell my 4 yr old)- they should lock, and forget about the potential emotion of the thought of a lower rate.
An interesting headline for you that was on CNN Money this morning: “Eight million in assets-and can’t get a mortgage”. Some statistics that you may find interesting: 12% of US mortgages > 1 mm are delinquent. That is triple of one year ago. Assets don’t count for much anymore. Jumbo lenders are skiddish. It’s all about credit, equity, and ability to repay (monthly income). Assets come and go. People spend money (what if this borrower decided tomorrow to give all his money to charity? Money is gone………so we look for monthly income (that is likely to continue) for purpose of debt to income ratio. Tax returns, and full disclosure. We really want to know.
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