This week’s update will be dedicated to the ‘ones I love’ (realtors). In the spirit of working together, and making transactions smooth, here are some tips for the New Year. You can call it ‘Survival in 2010’ if you like!
APPRAISALS (HVCC)
Yes, it’s still in effect, and no sign of a moratorium. Did you know that Patriot has its own ‘short list’ of appraisers that we choose from? We do NOT use Appraisal Management Companies (AMC’s) as does some of our competition. AMCs pad fees, and they pad turn times on appraisals. Beware.
TIP: Interview the lender once you receive the approval letter! Whether you are the buying or selling agent, you have the RIGHT to know!
Sample Questions to Ask a Lender:
· How does your company order appraisals? Do you use an appraisal management company?
· How many days on average to receive the appraisal once ordered?
· When will you order the appraisal?
· What are your underwriting turn times?
· Do you release documents early on average? How early?
· How many files does your processor work on at one time?
· Where does the loan get processed? Local? Out of state?
· Where is the loan underwritten?
· Are you a broker or the lender?
CONDOS (not Townhouses)
Investors, first time home buyers and empty nesters LOVE them! Lenders cringe at them. This is because condos are a haven for foreclosure. Heavily investor-owned, it is the first investment to go bad, especially when dues are not being paid and the property begins to deteriorate. We have seen this happen in Houston! There are entire buildings around town that were foreclosed upon as the result of ‘straw’ buyers and dishonest developers. You know which ones they are.
Questions to ask the HOA at the time of listing OR if you are buyers agent (before showing) ****if we wait until contract, it could be too late, and buyer and seller have wasted their time – not to mention you!
· Owner Occupancy rate (50% for FHA, 70% for Conventional)
· Are >15% of the owners delinquent on HOA monthly dues
· Is there a min. of 1 mm fidelity bond insurance in place? (***this is addressed on the ‘master’ policy, and can often be missed until closing **)
· Are there and pending lawsuits (if so, what are the details)
· Does the budget allow for deferred maintenance (meaning….there is none, right?) *we will want to see reserves on their operating statement too- to avoid deferred maintenance
· Does more than 1 entity (aka, person, bank, etc….) own >10% of the units? **Bank foreclosures are NOT exempt from this equation!
DEBT TO INCOME maximum allowed is 45%
In the heyday, we could go up to 65% debt to income ratio if the client had 10% down, and an excellent credit score. That is taken from gross income! Very generous indeed. Then last year, that went to 20% down in most cases. Well, as of Dec 12, it is 45% debt to income, regardless of who you are, or how much money you have in the bank. End of story.
But good ole FHA is still our friend at 55%, at least for now.
Tip: Buyers to get qualified EARLY, EARLY, EARLY! But you already knew that!
GOOD FAITH ESTIMATE (GFE)
The joys of change... The biggest take away is that now the good faith estimate discloses ALL charges, no matter who pays them (buyer or seller). So at first glance, and left without interpretation, the buyer can be in the dark and confused and hesitant to buy the home.
Tip: Ask questions to the buyer, or be prepared for their questions.
· Did they know that a good faith estimate will not likely be given until they are under contract?
· Have they received a ‘cash to close’ and/or a ‘monthly payment’ summary in conjunction with the good faith estimate?
· Prior to having a contract /property, they will get a summary, likely called a ‘Fee Worksheet’ (just a change in terminology)
· They need to be prepared that they will not receive fees/rate unless they have given the lender documentation and pulled credit
· Rate is 90% dependent on credit score! (a lender credit score, NOT a ‘myfreecreditreport.com’ credit score )
I hope you found this information helpful. Enjoy the glorious weather, and as always, you can count on us for all your mortgage questions!
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