10 States with Pricey Closing Costs

Closing costs have risen an average of 36.6 percent compared to 2009, according to Bankrate.com’s annual survey.

The big increased was caused by the U.S. government requiring lenders to provide accurate good faith estimates of closing costs. Previously, lenders weren’t penalized for a bad estimate.

On average, the origination and third party fees on a $200,000 purchase mortgage added up to $3,741.

Here are the 10 highest states:

1. New York, $5,623
2. Texas, $4,708
3. Utah, $4,605
4. California-San Francisco, $4,566; California-Los Angeles, $4,406
5. Alaska, $4,327
6. Oklahoma, $4,254
7. Pennsylvania, $4,236
8. New Jersey, $4,110
9. Idaho, $4,077
10. Massachusetts, $4,025

Source: Bankrate.com (08/16/2010)

Fannie, Freddie Will Not Forgive Underwater Debt

Despite rumors to the contrary sweeping Wall Street and Washington, D.C., the White House says it is not planning to order Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of people who owe more than their homes are worth.

“The administration is not considering a change in policy in this area,” said Treasury spokesman Andrew Williams.

Mortgage bond prices stabilized after that rumor was quashed.

Source: Reuters News (08/05/2010)

It’s a Great Time for Housing Deals

Paying off an underwater mortgage and buying a better home could be the best tactic in this troubled market.

“If you are trading up, what better time than when interest rates are at record lows and the cost of the trade-up is much less than it used to be?” says Christopher J. Mayer, a Columbia Business School economist.

With 15-year fixed-rate mortgages at about 4.5 percent, it also makes sense to pay off the mortgage and keep the house. “At this point,” says Jay Brinkmann, chief economist of the Mortgage Bankers Association in Washington, D.C., “if they don’t have anything else that is bringing a tremendous return, then they are buying themselves an annuity by paying their house off sooner than they needed to.”

Source: The Wall Street Journal, M.P. McQueen 

GA Dream Programs…

Ga Dream Rates are at a Historic Low!!!! This is great news for our first-time homebuyers, with 2 different down payments assistance programs available.  I would be happy to tell you more about the standard Ga Dream program and the Rewards program, offering you $5-$7,500 in down payment funds!

Tight Credit Standards Halt Some Buyers

Lenders continue to reject borrowers with otherwise good credit when they diverge from the standard approval checklist.

Would-be borrowers facing the most problems include the self-employed.

One reason bankers are so nervous are the standards held out by Fannie Mae and Freddie Mac. Not only are Fannie and Freddie demanding credit scores above 720, they are refusing to buy back defaults when the original mortgage application had small discrepancies from the norm. To avoid losses, lenders are being extra careful.

The result is that some borrowers are being rejected for problems that seem completely inconsequential.

Source: The Wall Street Journal, James R. Hagerty and Nick Timiraos (07/10/10)

FHA Program Offers Purchase, Renovation Aid

The Federal Housing Administration is encouraging use of its little-known 203(k) loan program.

The 203(k) lets an owner-occupant borrow money for both the purchase and renovation in one loan, and put down only 3.5 percent.

The program requires the use of credentialed contractors and can include cosmetic improvements as well as major renovations like replacing plumbing or electrical. Completing the application process requires patience, says Nancy Hammock, an associate with RE/MAX Properties in Western Springs, Ill.

But in this lending environment, more homebuyers are finding 203(k)s worth the hassle. In fiscal 2008, the government insured about 6,700 of the 203(k) loans. This year, more than 11,000 loans have already been insured, according to the Office of the Comptroller of the Currency.

Source: Chicago Tribune, Mary Ellen Podmolik

Sam Thompson Mortgage Update: “Get Over it! Please”

I could hear the frustration in the agent’s voice when he left me the following  voice message this week:

 “Sam, it seems like every house that my customer is looking at in his price range needs some kind of work.  One has the electrical ripped out of the attic and the other needs a foundation repair of about $6,000.”

 “I need to talk to you and see how the FHA 203K loan works and what is involved,”  said Hicks Malonson, an associate broker with Harry Norman Realtors in Marietta. 

 I know that there are  those of you out there that have not been involved with a renovation loan before and  may  feel anxious and reluctant about getting involved with this unknown animal.  What the heck’s a K-loan (as we affectionately call them), anyway?

 So I am going to ask those of you who feel that way to confess, slow down for just a minute and let me give you some very important advice :   GET OVER IT! Quickly!  Please! 

Actually I was walking through the Fernbank Science Museum

a couple of Sundays ago and noticed all of the animals that are not with us any more.  A pitty, don’t you think?  Too bad there was no one around to advise them to change their habits before it was too late.  Or perhaps Charles Darwin was right.  Perhaps they evolved and adapted to the changing environment over time. 

In the same manner of thinking, how much longer will you survive in the current challenging real estate market we find ourselves in if you refuse to use some of the tools you need to succeed?

Nia Knowles with Solid Source Realty  is a renovation expert in marketing her community in the West End of Atlanta.  She knows that renovation lending is a little more complex than the average mortgage loan transaction and may take a little more time, but that it is really the only way to get the job done.   Unless your buyer is paying cash. 

Melissa Krudwig of Keller Williams in Marietta is participating in her first 203K loan transaction with a client that is a first-time homebuyer.   “I believe that the FHA 203K program is very important and is very critical in today’s market,” says Krudwig, who markets herself to her customers as the Bear of Real Estate.

“The Atlanta Real Estate inventory is flooded with incomplete and vandalized homes that will simply never pass the appraisal requirements for a traditional FHA Loan,” explains the Bear.  “Most of these properties are great properties at the bones of the homes but they need some additional help such as replacing a stolen HVAC system.  If it was not for this program, my buyers would not have the dream home that they so desired.”

Nationally, Wells Fargo, my lending partner, controls about 40 per cent of the FHA 203K renovation lending market.  The loan process itself takes a little longer, about 45 days.

So if you would like to learn to be a bear instead of a dinasour when it comes to selling properties that need a little work, please give me a call.  For he or she that hesistates may become extinct. If you think your office would like training in renovation lending, please ask your broker give me a call.

Until next week.

Best regards, Sam Thompson

Loan Officer and columnist

 

Phone: 770-301-0527

email:  Sam.Thompson@HSL-GA.com 

web:   www.homeloans.com/sam-thompson