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Archive for June, 2008

Cruising Charlotte, North Carolina

This morning on the way in to the office, I stopped for some gas. As I was filling up, I heard a car revving the engine and spinning its tires. Two thoughts came to mind… “I remember the days!” and “With gas at $4 a gallon, are you nuts?!?”

This got me to reminiscing and that got me to thinking… Does anyone Cruise in Charlotte?

Growing up in a small rural town, I remember the days of getting in the car and heading uptown to cruise the “main strip.” We would drive from one end of town to the other just to be seen. Before long, local lawmakers began to “outlaw” cruising, stating that if your car was seen going back and forth more than twice, you could be ticketed. We just changed our routes!

But today I am 35 and that was years ago. Do teens and twenties still cruise? And in Charlotte, where would you do that? Does Cruising in Charlotte still happen, or is that a dying art form?

Charlotte Home Loans Went Offline

Due to a recent influx of guests and visitors, Charlotte Home Loans traffic and server loads jumped! While this is exciting news, it also means the EdNailor.com is getting too big! Too big for our current server, anyway!

We are in the process of making changes and will be moving the website to a new server soon. We want to ensure that the information and services that we have become well known for in the Charlotte real estate and mortgage markets continues to be there for you!

So thank you for visiting and helping us to outgrow out host!

Ed Nailor

This past Thursday, I was interviewed by Julie Rose, reporter with WFAE 90.7 FM, an affiliate of NPR (National Public Radio) here in Charlotte NC. Julie Rose was doing a story on Wachovia’s Pick A Pay mortgage loan and wanted to ask me some questions. Seems she has been reading Charlotte Home Mortgages as well (good for her!) and felt I might know something about this…

Recently Wachovia has been coming under fire for the Pick A Pay mortgage loan. Recently it was reported that Wachovia was really putting pressure on their loan officers to push this product, even if it wasn’t what a borrower wanted to needed. (read Wachovia Pressures Loan Officers)

An exceprt from Julie’s report as found on WFAE’s website:

This week Wachovia started a new policy of calling every customer who applies for one of its controversial Pick-A-Payment loans through an independent broker.  The bank says it wants to enhance customer service and prevent fraud.  But there could be another reason.  WFAE’s Julie Rose reports.

As you can hear in the audio clip, my sound bite was small. As such, the point I made with Julie was cut short (however, it was not taken out of context - great job Julie!) The point I was making was that wholesale lenders calling mortgage broker’s clients is not the norm. Yet I could see why Wachovia may be doing it, if for no other reason than to help the public relations nightmare that Wachovia is dealing with over the Pick a Payment loans.

The Pick A Payment mortgage loan was not a horrible mortgage product IF it was sold properly. These types of mortgage products were offered by a large group of lenders. However, it was sold as a way to get a super low payment to anyone that wanted it. While it did provide options for a low payment, that was not the only consideration for that mortgage product. If the borrower had good equity that could handle the negative amortization AND planned on applying the savings from the mortgage payment to something more beneficial (such as debt elimination or wealth building investments), then it could be a good mortgage. Regardless, the borrower that best fit this mortgage loan was your saavy investor or seasoned home owner. This loan was sold to too many first time home buyers just looking for the lowest possible payment. And now we have major fall out.

Anyway, thanks Julie Rose for taking the time to call for an interview. Feel free to call again if I can help!

FHA “Flipping” Rule Has Been Waived

June 9, 2008: FHA’s Assistant Secretary for Housing - Federal Housing Commissioner, Brian D. Montgomery signed the Waiver of Requirements of 24 CFR 203.37a (b)(2) which waives the requirement of the seller of a property holding a property for 90 days prior to obtaining FHA financing. This waiver is good for one year and expires June 9, 2009.

What does this mean to Charlotte?

Buying a home in Charlotte now means more options. No longer does property purchased by an investor, or foreclosed on by a lender have to be held for 90 days prior to selling in order to qualify for a Charlotte FHA mortgage loan!

Under FHA’s guidelines, once the ownership of a property changed hands, it had to be owned for 90 days before FHA would extend a loan on it. This restriction would cause many Charlotte foreclosures to have to sit for 90 days before a contract could even be executed on it!

CORRECTION: After futher review, it appears that investors will still be subject to the 90 day rule. The intent is for mortgage companies with foreclosures to have easier access to liquidate their foreclosed properties. This correction should be noted. This also opens the market up for investors that “flip” homes.

In my opinion, I would love to see this opened up to investors as well. There are many investors that will buy a home that needs some serious work, rehabilitate the home and then sell it for a quick profit. The neighborhood and community benefit from such rehabilitation, and in many cases the home buyer gets a great home at a great price! An investor has to own the home for 90 days before they could sell it to someone using FHA mortgage financing, even if the home was ready in 30 days! If this waived was extended to include investor properties, it would allow Charlotte homes for sale by an investor to be sold as soon as they are ready. Maybe HUD will review this as well.

Regardless, this waiver of foreclosed home should open up many options for home buyers using Charlotte’s FHA mortgage programs. If you are considering purchasing a home in Charlotte, now is time to take advantage!

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Charlotte Home Loan Dies over $25

“But it was only $25.00. Surely that can’t matter that much!” Unfortunately, it did.

Recently a client of mine went from being approved to buy a home in Charlotte to being denied for a Charlotte mortgage loan. It was over a $25 credit card payment. Unfortunately, the payment on one of their credit cards was not paid on time and the late payment was reported to the credit bureau. This late payment caused their credit scores to drop significantly, enough to disqualify them from the mortgage they had applied for.

The amount of your monthly payments has no bearing on the significance of the payment history. It does not matter if the monthly payment is $1,000, $100 or $1. If there is a payment due and it is not paid on time, it is reported as late. A recent late payment will hurt your credit rating and your score will suffer because of it. Most mortgage companies in Charlotte and across the country are looking very hard at credit. It is more important than ever.

If you are considering buying a home in Charlotte, make sure that every obligation you have is paid on time. If you think it is insignificant, pay it anyway. The last thing you want to experience is what this client did… it can be very heartbreaking. And delivering the news isn’t fun on my end either!

Best Negotiating Technique When Using USDA Mortgage Loans

Typically, when negotiating on a home purchase contract, many home buyers will offer a price that is lower than the listing price. The idea is to get a deal… a bargain. No matter who we are, we love to negotitate (even if we say we hate it!) However, when you are using a mortgage loan from USDA funds, your strategy may be slightly different.

USDA Mortgages allow 100% financing. As a matter of fact, USDA mortgages are about the only true no money down mortgage loans available today! In addition to 100% mortgage financing, USDA mortgages have no monthly mortgage insurance and enjoy really great rates! If you can qualify for a USDA mortgage, you should really consider it.

The one thing that is different about a USDA mortgage is that instead of monthly mortgage insurance, USDA mortgages require a funding fee. This fee acts much like mortgage insurance as the fee is used to insure potential losses from foreclosures. Currently, the up front funding fee for USDA mortgage loans is 2% of the loan. The best news is that this can be added to the mortgage itself!

Back to the negotiating strategy… When you are going back and forth on the offer to purchase on a home, you have a very unique opportunity in front of you. So many people come in asking for discounts and for the seller to pay closing costs. In more and more cases, using FHA mortgage loans, home buyers are also asking the seller to help pay for the downpayment! In so many cases, a buyer is asking the seller to drop over 10% off the price of the home to accomodate all these requests.

When offering to buy a home using the USDA program, you may want to consider a different approach. Since you won’t need down payment, focus more on asking for seller paid closing costs! USDA mortgage loans do not have a cap on how much a seller can contribute towards closing, so you can use that to your advantage.

For example, rather than asking for 5% off the home and the seller pay 3% towards closing, offer full price and ask the seller to pay 8% towards closing. Why so much? First off, this can help offset the 2% funding fee required by USDA mortgages! And since there is no cap by USDA on how much the seller can contribute, use any additional money you can to buy down your mortgage rate! An extra 1% to buy down the mortgage rate could save you thousands more than a simple price discount on the home!

Ask your mortgage lender for a comparison of rates if you wanted to buy down the mortgage this way. Between your mortgage lender and your Realtor, you will have more than enough information to insure you make the right offer and win!

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Do a search online for “mortage underwriter” and many of the images you will find are of sharp looking, well dressed individuals that seemingly do not have a care in the world. For example, here is one right off the internet:

However, this is such a false pretense! Today’s mortgage underwriters, while professional and sharp, aren’t just sitting around with nothing to do! They are busy, very busy! Most of them are stressed, with dozens of files sitting on their desks that need to be looked at TODAY! In addition to the files they have to get to TODAY, they are also dealing with processors and loan officers calling and emailing them all day long.

Imagine if you will, you have 45 loan packages sitting on your desk. Each file has forms and papers just thrown in them in no particular order and you have to sort them out and make sense of them. Now, for each of those loans, consider that during that day you will get 2 phone calls and probably 3 emails regarding EACH ONE. That means that besides having to review 45 loans (and all the forms and papers that are included in each one) you will have roughly 225 interruptions. Each one is “urgent” and will give you the impression that you must stop everything you are doing to look at this file.

Sure there are occasional files that do need immediate attention, but for the most part they don’t. But if people would just leave you alone for a few hours you might be able to know a big dent in that stack!

Now.. here is what today’s mortgage underwriter looks like: Read the rest of this entry »

Down Payment Assistance for FHA sees Increased Fee

According to The Nehemiah Program, effective June 9, 2008, the fee for processing the down payment assistance program through Nehemiah will be increasing. Here is an excerpt from their press release:

Nehemiah has built its reputation through our relentless commitment to providing affordable homeownership solutions to the public. Unfortunately, current economic conditions have had a dramatic impact on our costs of operation. Additionally, we incurred significant costs associated with our recent regulatory victory and the expenses related to educating the public and governmental officials regarding the facts about downpayment assistance. While we strive to hold costs down and have held the line for a long time, it is now necessary for us to temporarily increase our processing fee.

Currently, the new list price of this fee is $599, up $100 from before.  However, as a preferred client, Residential Mortgage Center is able to get this fee at a discount, better enabling our clients to accomplish their goals! (including Charlotte first time home buyers!)

Down payment assistance for FHA mortgage loans is a key part of helping Americans realize the dream of home ownership, especially first time home buyers. Despite the recent demise of the subprime mortgage market, buying a home without a major down payment is still possible. Some critics say this is a bad idea, citing that this is what caused the mortgage and real estate crisis we are currently in. But I disagree as the real issues stem from a combination of investors speculating that values would just continue to increase at record pace with no end in sight and the offering of mortgage loans to individuals that should not have qualified in the first place. The amount of money down had no impact on a home buyer’s ability to make their mortgage payments.

With the continued use of Down Payment Assistance programs, many first time home buyers in Charlotte can actually take advantage of a soft market and stop renting. Getting the country’s real estate market back on track should be a priority and banning DPA programs would bring that recovery to a stand still.

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Hold on to your seats! Rates are heading up!

Over the past couple weeks, we have begun to see a steady upward trend in mortgage rates. Last week, rates began to worsen and we have not seen any real relief since.

Much like the gas prices, even when good news comes, the prices seem to still climb. Mortgage rates have tended to follow the news. Good economic news such as a down turn in unemployment and an improvement in the stock market would usually push mortgage rates upward. Conversely, if unemployment rates rose and the stock market fell, rates would decline. However, over the past week, we have seen a steady increase regardless of what the news says.

This makes one wonder if we have seen the bottom of mortgage rates for a while.

Last week, you could find 30 year mortgage rates hovering around 5.875%, where today given the same pricing criteria, you might see rates more along the 6.375%. (This is not an advertisement of any rate or program; rather it is for illustrative purposes to explain the rise in mortgage rates lately.)

If you are on the fence waiting to see if rates will get better, get off the fence now! Mortgage rates in Charlotte may have seen the lowest rates we will see for some time to come.

Looking for a Home in Charlotte NC?

Charlotte North Carolina was recently noted as the only real estate market in the entire nation for property values that did not decline! With the steady job base and strong local economy, many people are moving to the Charlotte area.

So where do you find a home in Charlotte? What resources do your use in your home search? When looking to buy a home in Charlotte, what do you do first? Let me see if I can help.

First off, you may be best to get pre-approved for a mortgage. If you get pre-approved for a mortgage before you shop for a home, you will be in a much better position when it’s time to make an offer to purchase a home in Charlotte. Not only will you know that you can buy that home, but you will also know how much home you can buy and get a good idea of what that house payment will run.

Secondly, you may want to search online for Charlotte real estate. There are many options available, but one of my favorites is Trulia. Trulia happens to pull all Charlotte real estate for sale from the Charlotte MLS, but also gathers information on Charlotte homes for sale by Owner and Charlotte foreclosure homes for sale. Use the following link to access a local search for Charlotte Homes for Sale on Trulia: Search Trulia

Third, seek assistance from a local Charlotte real estate agent or Charlotte area Realtor. Real estate agents in the Charlotte area can not only help you find a home for sale, but will also become a very valuable asset when it’s time to make an offer to buy a home. Charlotte area Realtors are real estate agents in Charlotte that are part of the National Association of Realtors. Realtors are pledged to a higher standard that real estate agents that have not joined the NAR.

Finally, you can drive the Charlotte neighborhoods. This is a great way to find homes for sale by owner in Charlotte. Many of the FSBO homes in Charlotte may not be found online as it is up to the owner selling the home to market the home. Charlotte Realtors know how to market homes and do so as a profession. Many FSBO sellers do not have the expertise in marketing needed to sell a home in Charlotte, but will try it before listing with an agent. By finding them prior to listing, you may be able to negotiate a better deal, especially if you have already been pre-approved.

There are many ways to find a home for sale in Charlotte. With all the tools available today, there is no reason not to buy a home in Charlotte if you are in the market!