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Archive for the ‘Buying a Home’ Category

No More Pick a Payment for Wachovia

It appears that Charlotte NC based Wachovia could no longer handle the negative press. They have officially dropped the Pick A Payment product from their mortgage portfolio. After spending all the time and money in buying (and defending the purchase of) Golden West Financial, they are now stuck with nothing more than a less than stellar return on the investment.

Wachovia has taken a beating on this product. While the “option arm” mortgage product is not a bad product when sold correctly to the right borrower, the way this was sold and the pressure Wachovia put on its loan officers to push this product really gave it a bad image. This image was one that Wachovia could not overcome, mainly because they never changed how they sold it!

So for now, Wachovia has dropped the Pick a Payment mortgage loan. In my opinion, this is actually good for consumers. While a good mortgage option for a select few, too many potential borrowers were being pushed to look at this loan even if it didn’t make sense for them. Now, with it no longer offered, Wachovia can push their borrowers towards less risky loans. But expect that they will still push. Their loan officers are paid on the types of products they sell and if they hit their quotas for each product. So while a 30 year fixed may be your best bet, your Wachovia loan officer may well still push you towards a 5 year adjustable because they need to sell 3 more of those this month.

When considering mortgage options, you really should look to a licensed mortgage professional that focuses on what best fits your needs, not the bank’s needs. The Carolina Mortgage Connection does not have any quotas to hit, and we only focus on the right solution to match with your needs and goals.

Banking on Bank of America could Cost You

Charlotte Realtors… If you currently count on Bank of America for majority of your Charlotte mortgage needs, you may want to start looking around a bit. With the aquisition of Countrywide, you should expect to see some changes at Bank of America!

Its no secret that Bank of America is buying trouble. Countrywide is riddled with bad loans, major defaults, negative press and a ton of impending lawsuits. And yet Bank of America is still buying Countrywide. The latest news is that 7,500 jobs will be cut as a result, mostly expected to be on the Countrywide side. But Bank of America will have to make changes too.

Any time a lender in the mortgage business sees major losses and defaults, they have to tighten up their lending practices to help compensate. We in the lending business have seen this time and time again. Mortgage banks that used to offer more flexibility are having to tighten up and offer less in terms of mortgage products and mortgage underwriting. Bank of America, while having made good decisions overall, is buying a major black hole that will force them to have to over-correct.

As a Realtor, if you have been relying heavily on Bank of America as your Charlotte mortgage referral source, you will want to quickly explore other lenders. As a result of this acquisition, you should expect Bank of America to begin raising their internal standards to accept only the cream of the crop home buyers. They will begin to further separate the margin of perfect credit borrowers with major equity from the less than perfect home buyers needing less money down. Very soon, those that fall into the latter circumstances will not see favorable mortgage programs offered.

At the same time, placing all your mortgage business with a major Bank will limit your opportunities. Major banks like Bank of America and Wachovia are having a tough time and will only have a handful of options for your buyers. However, working with a dedicated Charlotte Mortgage Lender will offer many solutions!

For example, the Carolina Mortgage Connection works for a Charlotte mortgage Lender. We offer the same mortgage products that any bank can offer, with mortgage rates and closing fees just as competitive. However, when you have a buyer that does not fit the “traditional bank mold”, we still have the flexibility to broker to other mortgage investors willing to take a risk on your buyers. And as investors come and go, we will always be in position to line your buyers up with the money they need at a price they can afford!

So Charlotte Realtors, arm yourself and your Charlotte real estate business with more options and opportunity. Let Ed Nailor and Residential Mortgage Center help you get more buyers qualified and close more deals! From the credit perfect to the credit challenged, we are uniquely positioned to provide the best in Charlotte mortgage rates, mortgage programs and mortgage solutions to your home buyers!

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!

Recently during a conversation with a local Realtor, we discussed common questions and misconceptions. One question that I had never heard was in regards to closing costs.

The Realtor’s buyer had asked the Realtor what “Settlement charges” were and if they were different than “closing costs.” As a professional in the business we throw these terms around all the time and occassonally forget that these “common” terms aren’t always common to the general public.

Closing costs are the costs to close on a mortgage loan. These costs normally consist of points, fees, attorney and title charges, escrow setup and any other charge or fee that is incurred from originating (putting together) a mortgage loan. They will vary from loan to loan, so there is no way to say what each fee should be.

Settlement charges are the charges at closing that are required to settle the transaction. These normally consist of points, fees, attorney and title charges, escrow setup and any other fee that is incurred from originating a mortgage… plus any additional inspections or charges (such as home warranties) that are incurred to complete the purchase / refinance of a home.

Generally speaking, these are the same thing. Technically speaking, the difference is that closing costs for a mortgage may not require a home inspection, radon inspection, water, pest or septic inspection. However, some of these inspections are usually highly recommended for a buyer to ensure there are not inherent problems with the home they are buying.

When you get an estimate on closing costs from your lender, pay careful attention to what is there. If there are not any inspection charges noted be prepared to account for those somewhere. A home inspection may not be required to get a mortgage loan, it is recommended that you get one and it won’t be on most estimates. So if it runs you $500 for the inspection, you must be prepared for the difference. And no, that is not a lender’s responsibility to estimate inspections… they are optional.

Hope that helps clear that up for anyone confused by the two terms.