Know the pitfalls of refinancing....

The TV and radio ads make it all seem so easy. Walk into a lender's office, refinance your home loan at a rock-bottom rate, and walk out with a lower monthly payment.

Here's a little tip: It's not so easy.

If you know the pitfalls, you can at least prepare for them - and perhaps chart a wiser course. A few issues that could have your application earmarked for the ‘Rejected' pile:

1. Heightened credit score demands

If you're refinancing, that means you've successfully secured a home loan already. But since then, lenders have started to demand near-pristine credit scores. "Now to get access to the lowest rates, you need a FICO score above 740," says Keith Gumbinger, VP of mortgage information site HSH.com.

Not quite the perfect score of 850, but still quite challenging to achieve. Credit scorer FICO does not break out the average number for refi applicants, but the national average is 690 -- well below what will get you prime lending rates.

2. Low appraisal

While interest rates have gone down, so have U.S. home values. The average home value dropped a third from the start of 2007 to the start of 2012, according to housing analytics firm Fiserv. For refinancing, that's a problem.

Chicago's Jesse Raub and his wife have owned a home for about three years, and recently started the refi process. But then the appraisal came in low.

"Beware that the appraised value of your home may not be what you think it should be," says Raub, 27, who's a trainer and educator for Intelligentsia Coffee. "Our new mortgage amount was close to the total value of the home - which required us to get mortgage insurance as well."

3. A home equity line of credit

You may have forgotten that you once took out a home equity line of credit. You may have not even touched a penny of it. But it could still derail a refi, because it means another lender has a claim on the value of the home.

"If you're refinancing your first mortgage, the lender of the home-equity line has to agree to that," says Mike Fratantoni, vice president of research for the Washington, D.C.-based Mortgage Bankers Association.

Essentially, that lender needs to sign off on being second in line, and agree that the primary mortgage will always be paid off first (in the event of a foreclosure, for instance). "There may be fees associated with that, and so a home-equity line of credit is one more thing that could make a refi more difficult."

4. Condo or co-op troubles

If lenders are going to fork over hundreds of thousands of dollars, they don't want any issues to make them nervous. And when the property is subject to decisions of an unpredictable board of directors, that can make them nervous.

"Any number of issues might trip you up," says Gumbinger. "If the building finances aren't in good shape, or if the insurance isn't paid up, or if there are any units in foreclosure, or if there are any lawsuits against the condo association, or if the building is comprised largely of renters. All kinds of fun stuff can arise."

5. Timeliness requirements

Banks want to see the most up-to-date financial information possible before they sign off on a mortgage. But they also have a tendency to ask for document after document after document regarding your financial situation. If the refi process has ballooned to 60 or even 90 days, but they require documents from the last 30 days, that could put you on a carousel of paperwork straight from the ninth circle of hell.

So get out your yoga mat, breathe deeply, and have a mantra ready. You're going to need lots of patience. "Expect the worst," advises Erin Lantz, director of the mortgage marketplace for real estate site Zillow.com. "If you come to terms with that at the beginning, it will remove the stress later on."

(Follow us @ReutersMoney or finance/personal-finance">here Editing by Beth Pinsker Gladstone)
By Chris Taylor; NEW YORK; Sat Oct 13, 2012 9:00am EDT


Yes, at MIG have these issues too. But we know what we are doing and routinely get our clients closed in 20 - 40 days. Call or reply to this email if we can help.

Fee Increase to Impact Home Loans

The Federal Housing Finance Agency (FHFA) has again increased the guarantee fee they charge to lenders delivering loans to Fannie Mae and Freddie Mac. This is important to know, as this increase has a rippling effect that will impact the cost of mortgage financing.

Here's what's happening and what it means to home loan rates:

What exactly is this "g-fee"? The guarantee fee or "g-fee" is an amount charged by mortgage-backed securities (MBS) providers, like Freddie Mac and Fannie Mae, to help protect against credit-related losses in the overall mortgage portfolio. In other words, it acts a lot like insurance and helps lower the overall risk...which means home loans can be offered at terrific interest rates to borrowers that have good – but not perfect – credit.

What exactly is the impact of the rate increase? The increase will impact loans with different amortizations in different ways. For example, for a $200,000 home loan, the increased g-fee (assuming a .125% increase in rate) would equate to $250 more per year in interest, or $7,500 more over 30 years. Someone buying or refinancing a home can certainly choose to buy down the cost with cash up front – but most folks will not do this.

Why is the guarantee fee being increased? FHFA has increased the guarantee fee to collect more revenue to enhance the safety and soundness of the Government Sponsored Enterprises (GSEs), and perhaps indirectly encourage private firms to participate in the mortgage market.

Who will this impact? The change will impact all new borrowers using Fannie Mae and Freddie Mac loans.

When will it start? Officially, the increase to guarantee fees will begin on December 1, 2012. However, Fannie Mae will also be making adjustments to pricing for those loans that are committed on or after November 1, 2012. It’s important to note that the increase is already being seen in rate sheets right now, since home loans being originated now will likely not be closed, pooled and securitized until December and therefore will need the increased g-fee priced in earlier.

The bottom line is that the g-fees will be going up...and this will impact homebuyers looking to obtain a home loan through Fannie Mae and Freddie Mac.

~Mortgage Market guide

P.S. I am told that most if not all companies have already reflected this is this in their pricing. And as you know the rates are still amazing. But bottom line it is another case where big government is getting paid by you and you probably didn’t even realize it.

CRACKING THE CODE: DUTY TO DISCLOSE

Do you know your disclosure responsibility? In a recent case, a Hawaii court found that a “Frog Addendum” alerted a buyer to the potential issue of tree frog din. Interestingly, in Brinkwood Land Equities Ltd. v. Hilo Brokers Ltd., the court also determined the broker had no duty to disclose that the surrounding neighborhood was allegedly frequented by drug dealers and prostitutes.


Article 5 of the Code of Ethics says REALTORS® shall not undertake to provide professional services concerning a property or its value where they have a present or contemplated interest unless such interest is specifically disclosed to all affected parties. This could apply to many different areas- for example, frogs. For more on disclosure and article 5, click here.


~~GNAR

Remember, if you want more information or would like to chat, let me know.  I can be reached at 615-777-4663 or via email at george.margrave@migonline.com

Still a Buyer's Market...but HURRY!

In case you missed it, the Greater Nashville Board of Realtors reported that sales for the area were up approximately  25% for both the month of April and year to date.  Inventory was also down by about 12%.   This explains the call I had from an agent this morning wanting to make sure his client had been pre-approved.  He proceeded to tell me that in the areas this young couple was looking that every time they started to look at a certain home it was sold out from under them.  So we are probably reaching a state of the new normal in the real estate industry.   It isn’t like the “good old days”. But there is reasonable hope of a seller to sell their home (average 88 days) and the buyers are still able to contract for good terms. It is still a buyer’s market, but if you are wanting to buy, the edge is slowly but surely moving toward the seller.

Is It Hard to Get a Mortgage?

I know that you have all heard that it is tough to get a mortgage approved. Well it is, but mostly it is common sense regulations that are designed to create good mortgages for good borrowers and home owners. The kicker is that so many of my so called peers at my competitors don’t know what they are doing. They are driving their clients insane. They don’t answer their questions and if the news is not good they don’t deliver the message, much less solve the problem.


I and my team pride ourselves in recognizing and solving issues. We don’t bat 100%, but we do well if I do say so. Every month we wind up saving someone’s purchase or refinance when some other lender just didn’t know what to do. My 27 years is good for something. :)

Email me at george.margrave@migonline.com or call me at 615-777-4663 for more info or to chat about it.

Good news and bad news

I have told you about how HUD is raising the MIP for their borrowers after April 1. Actually the final letter says April 9th now, so we got a few more days. So If you are thinking of buying, you would save money by getting the transaction far enough along to order the FHA case number and appraisal by then. The countdown is T minus 26 days


Now the good news. People that currently have an FHA loan that was closed prior to the first part of 2009 (date to be determined) will be able to get a considerably lower MIP for their refinance. This will mean a big savings. So if I ran the numbers for you and it didn’t look very good, it is about to get a lot better. But we have to wait until June 11.


You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com .  

Don't Put Off Buying...HUD Raising MIP 4/1/2012

Last week I told you about how HUD is raising the MIP for their borrowers after April 1.  So If you are thinking of buying, you would save money by getting the transaction far enough along to order the FHA case number and appraisal.  My political comment on this may not interest you, but the powers that be are piling on the average homebuyer.  That is exactly what they talk against.  If housing were to have a recovery (even moderately) the whole economy would benefit dramatically.  So why would they keep putting the brakes to the most obvious things. I’m just saying.

You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com .

Higer MIP Coming April 1, 2012

No, that is NOT an April Fool's joke, but you can bet it really looks like one.

The FHA announced that it is raising Mortgage Insurance Premiums (MIP) for FHA mortgages. These increases will only impact new FHA loans and DO NOT impact existing FHA borrowers. The MIP changes can be summarized as follows:



* Upfront MIP increase by 0.75 points to 1.75%. The UFMIP as is the case now can be financed into the mortgage. This change is to be effective from April 1, 2012.


* Effective April 1, 2012 FHA is also increasing its MIP by 10 bps as required by the Temporary Payroll Tax Cut Continuation Act of 2011.


The FHA estimates these changes will add over $1 billion to their fund based on their volume projections through September 30, 2013.


We will have additional details as soon as possible.


From Jesse Lehn, MIG

Remember you can always reach me at george.margrave@migonline.com or http://www.mignashville.com/ or by phone at 615-777-HOME (4663). 

Reverse Mortgages

We haven’t talked about reverse mortgages lately. In the right situation they are wonderful. All of a sudden our client has no house payment (except taxes and insurance). In some cases they may even get a payment to them in the form of a lump sum of cash or other bills paid off. There is no credit check so credit is not a factor. The equity in the home and the borrower’s age are the main factors. If you have a friend that is interested send me the address and birth date and we can give you a rough idea.


You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com

Are YOU a First Time Home Buyer? We can HELP!

I want to mention our expertise with First Time Home Buyers. My team accounted for the most THDA loans in the state for 2010. This fiscal year which is almost half done finds us in the lead again. I just want to point out that these loans are not always the easiest, but I think we are serving our community by working on them so diligently.



You may not realize it but in most cases we can structure it so that these buyers do not have to have money to make the purchase. (this is in spite of what you read in the media that 20% is required)The interest rates are great and as a result of this, our borrower often owns a home for less than the rent they were paying.

You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com .

Housing News: 11 Trends from 2011

The National Association of Realtors® surveys homebuyers and sellers each year to uncover housing trends and monitor changes taking place in the industry. This year's report highlights a number of trends that haven't been seen in years. Here are just 11 highlights from the 2011 report.

1. In 2011, 37% of homebuyers were first-time buyers - which was down from 50% in 2010.

2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009.

3. The typical homebuyer searched for 12 weeks and viewed 12 homes.

4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% - a share that has steadily increased from 69% in 2001.

5. Nearly 1 out of 4 buyers said the application and approval process was "somewhat more difficult" than expected…and 16% reported it was "much more difficult" than expected.

6. About half of home sellers traded up to a larger and more expensive home…and 60% traded up to a new home.

7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes.

8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007.

9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price.

10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of those people, 40% knew the buyer prior to the sale.

11. The typical "for sale by owner" home sold for $150,000 compared to $215,000 for the average agent-assisted home sale.

All Contents ©2012 The National Association of Realtors®.

Mortgage Market Guide

If you would like to talk and find out what we can offer you, please give me a call at 615-777-4663 or send me an email at George.Margrave@migonline.com.

Home Sales Show Increase

Sales in Middle Tennessee grew by more than 20 per cent over 2010. There were 1502 single-family homes sold which is a gain of 21.4%. It was the 6th consecutive month that home sales topped their year-ago levels. People who haven't had confidence are now starting to move forward.

According to the Greater Nashville Association of Realtors single-family homes purchases for the entire year grew 1.5% over 2010 to reach 17,192 properties. It was the first time since 2006 that annual home sales rose for the year.

Williamson County saw an 8.4% increase. Median prices in both counties were slightly lower. The median price for the year was around $167,000 down about 1 per cent. Pending sales were up 23% which is a great sign of future growth

If you have been waiting on the economy, it may be time to get moving. Call George at 615-777-4663.

What's the real cost of the payroll tax cut?

When you heard that our Federal Government had extended the tax cut and long term unemployment benefits for two months, you were probably glad. If you read on, you discovered that the two months were financed on the back of the Real Estate industry. (For 10 years!) Details are still sketchy, but from what I understand every FHA, Fannie Mae or Freddy Mac loan closed for 10 years will have a 10 basis point surcharge. (That is almost the equivalent of .125% increase in the rate of probably about 90 percent of the loans that will close in that period.) Now I ask you which industry does our country desperately need to turn around? That is right, the real estate industry! So why not raise their cost?


I am honestly wondering if anyone in either party has a clue what they are doing up there.

I'm just saying----.
You can reach me at 615-777-4663 (HOME) or email me at George.Margrave@migonline.com .

Cash On Hand?

Today's topic is cash and miscellaneous deposits to your bank account. When processing a loan, it is an issue.


And you say how can that be a problem? When an underwriter looks at a bank statement and sees deposits that are not payroll they have to find out where it came from. They worry that it is unreported income which is a problem on loans with income limits such as THDA, or they worry that there is an unreported obligation, so you can save yourself a lot of aggravation if you have cash and can't document it by not putting it in your account. If you are going to need it to make your down payment, we need to address it. Call me for insight.

Should you have any questions or need help with any of this, please feel free to contact me at my office at 615-777-4663, my cell phone at 615-481-5626 or via email at George.margrave@migonline.com .

Lowest Rates Ever! (No really)

If you have been keeping up you know we have the lowest rates since I can remember (I think they are the lowest since the records were kept.) You have been hearing radio ads about this for the last two or three years, but now it is really true. How can it benefit someone who wants to refinance?


If you have an FHA loan at about 5.75% or higher, it would probably benefit you to lower your rate on another 30 year loan in the 3’s or low 4’s. For a little more we can pay your closing cost. If you can go to 15 year, it will probably still increase your payment but can make a huge difference in your future equity position. The kicker with FHA is the MIP payments eat up some of your interest savings. If you don’t have equity, we can do a streamline loan with no appraisal, but you have to pay the closing cost out of pocket, or we as lender might be able to pay it for you. Call me for details.

If you have a conventional loan, we are most likely going to have to have an appraisal. There will have to be enough equity to finance closing cost or you could pay them or once again we as lender may be able to do it. Once again call or email your questions. Just click on reply.

The bigger the loan the more savings you get. Also once again don’t forget the 10 or 15 year loans if you can handle the bigger payment.

I can be reached at 615-777-4663 or via email at George.Margrave@migonline.com .