Jim’s Soap Box
Arizona Real Estate Newsletter – July & August 08
First off, I would like to proudly announce that July was a great step in the right direction for both me and the mortgage industry here in Arizona. The amount of Purchase Contracts that crossed my desk doubled in July, and I even had a couple of refinances as well. So, for those of you who were “concerned” about the missing July edition of Jim’s Soapbox (you can stop bugging your Internet Service Provider for the lost email) because here it is!
The goal of my newsletter is to provide educational material mixed with Jim’s unsolicited yet fascinating opinion on the Arizona housing market and real estate ownership in general. If you would like me to address a specific topic in the future, please email it to me and I will respond in the following newsletter.
Tunnel Lights Approaching
There is light at the end of the housing tunnel for about 40% of the United States. And more importantly, 60% of us are unknowingly already out of the tunnel. The following is from a White Paper/RISMedia report edited by John Benson. For those of you who regularly read the Soapbox know that I have never been a fan of Big Media, thus the following article really spoke out to me.
When it comes to the national housing market, there is a lot of gloom and doom in the daily newspaper. Just look at a few recent headlines:
• “Home Builder Sentiment, So. California Home Prices Crumble” - USA Today, 7/16/08
• “Home Builders Post Steep Losses as Value of Unsold Land Slips” - New York Times, 7/27/2008
• “Home Prices In May Took A Steep Fall” - The Wall Street Journal, 7/30/2008
“Thank God the economy is not as bad as you read in the newspaper every day.” - Phil Gramm, top economic advisor to Sen. John McCain (R-AZ) Lost amid the uproar caused by Gramm’s proclamation that the U.S. is a “nation of whiners” was a breath of economic fresh air to Realtors nationwide.
The economic recession that the United States is facing has been portrayed in the media as being brought about by the rising cost of oil and the “burst bubble” in the housing market. There is no denying that the cost of oil continues to stand at near record levels. But while the bubble has burst on the housing market, is it really still a nationwide problem?
A recent report contributed to RISMedia, “Why 60% of the U.S. Can Stop Worrying about the Housing Market,” simply states “no.”
While home values did fall as the bubble burst, the media continues to report constant drops across the nation in national home values. The Office of Federal Housing Enterprise Oversight’s (OFHEO) House Price Index (HPI) tells a different story than the media is reporting. Citing data from home sales and appraisals for refinancing, OFHEO reported in May that 35 states saw a positive home value price change in the first quarter of 2008. In addition, 164 MSAs (Metropolitan Statistical Areas) showed positive first quarter appreciation when compared to the same quarter of 2007…
…According to PMI Mortgage Insurance Company’s “Economic & Real Estate Trends” report for summer 2008, almost 68% of the nation’s 322 remaining MSAs experienced positive appreciation during the quarter when MSAs located in California, Florida, Nevada, and Arizona are removed from PMI’s calculations.
Question – If the numbers from the end of this report excluded Arizona should it be considered good news? Heck yes!! The bubble bust over two years ago and now 63% of the nation experienced appreciation in their property from Q1 2007. That is an excellent sign that the worst is over and the remaining hard-hit areas (like AZ) are soon to follow. It is true that AZ still has a large supply of homes available, but we also have 10,000+ people (net) moving to Maricopa County every month. The end of the down cycle will be soon – even if they do not say it on TV!
Decreasing Home Values = Good News??
If your home value dropped since you last financed or purchased it, you might be able to turn it towards your advantage. Your Homeowners Insurance premiums are based primarily on the replacement value of your home. So if the replacement value of your home has dropped over the last 2 to 3 years, you should call your insurance agent to see if your Homeowners Insurance premiums should go down as well. It won’t make you rich,… but you might save a couple hundred bucks a year.
Here is the name of the Insurance Broker that I have worked with for years, and trust very highly. I suggest that you compare your current policy with what she has available using today’s property value.
April Irish
Hill Insurance Services
480.368.5222
airish@hill-ins.com
Bank Owned Property & Short Sale Property
The majority of purchases I have seen in the last 9 months are primarily buyers who are looking at either Bank Owned properties or homes that are being sold “short” to avoid foreclosure. There are simply not that many people looking to buy from private owners these days. Rather, everyone is looking for a smoking deal!
There is no arguing the point that these types of homes will be sold under their appraised value, giving you an immediate equity position. But, like many great deals – there can be a great deal of pain in your butt to actually get the home. My advice to anyone looking to get a bank owned/short sale home is to be ready to be extremely patient.
Bank Owned
A house that falls into foreclosure is eventually possessed by the bank in first lien position on the home’s Title. This is what we call a Bank Owned house. When you negotiate to purchase a Bank Owned home, you will be dealing with an unemotional seller who would like to recoup as much of their loss as possible, and they would like to sell the house quickly. Truth be told, banks prefer to lend money over owning & selling property.
When dealing with a Bank Owned homes (sometimes called a R.E.O.), be prepared to compete against several other buyers simultaneously. Usually the bank will price the home under its appraised value and take offers for up to 3 or 4 weeks before accepting a contract. They will then take the strongest offer. The “strength” of the offer will be a combination of how much the buyers offer, and how much of it they are financing. An all cash buyer will appear stronger than another borrower financing 97%.
Be prepared to outbid people who will offer more than the list price. If you need seller concessions to cover your closing costs, you should bid high enough above the asking price so that the bank will closely net that figure. Also, be prepared for the banks to reject your offer if you are asking too much in concessions to purchase the property.
Many REO properties will be listed and sold “as is”, meaning that they are not interested in fixing anything broken before you take possession. In the case of a government loan (especially FHA) items like the water heater, sink, and the arcadia door will all need to be fixed before your loan will go through. Be prepared to pay for the potential repairs yourself, or experience an escrow hold back during your purchase. The key is to remain patient and prepare yourself to lose negotiations on 2 or 3 houses before you actually get a contract on one you like.
Short Sales
If you think that buying a REO sounds aggravating – check into a Short Sale transaction. A Short Sale happens when the homeowner sells the property to a buyer at a loss to the bank. The seller usually entertains this idea before they slip into Bankruptcy or Foreclosure. This maneuver can actually be in the bank’s best interest too, if it saves them money over the alternative of the foreclosure proceedings and selling another REO. It is definitely in the seller’s best interest because a Short Sale is not nearly as bad to your credit or well being as a Foreclosure is.
So if both parties (Bank & Seller) benefit from the Short Sale what is the problem??
In my opinion - banks are great at lending money –but they are basically inept at selling houses in a timely manner. I cannot speak on behalf of any specific bank, but I would surmise that they are way too bureaucratic to do anything effectively. A bank will not identify an “acceptable” short sale value for a home until that property has actually been listed and there is a contract on the table. They will then take up to 90 days (no kidding) to give an answer. Many times that answer is no, because the offer is too low and the bank cannot justify that much loss on the current loan. The crazy part is that you can’t even ask the bank what an acceptable amount is until you have a contract in hand. You are basically throwing “manure” against the wall and seeing what sticks.
In some cases, the bank will actually respond to the original contract with a counter offer identifying the minimum value they will accept, but that is not often. In the event that you are trying to purchase a short sale property that has 2 liens against it (a 1st & 2nd Mortgage) held by separate lenders – you can double the aggravation and the headaches.
Also, the lien-holding bank reserves the right to cancel the deal any time during escrow for any reason they see fit. So, until you sign your loan docs (and it funds and records) they can cancel your purchase. DO NOT FALL IN LOVE WITH A SHORT SALE PROPERTY – it will break your heart and usually will.
However, if you have the patience and temperament for 6 months of negotiations – a short sale property can be a bargain!
*** If you know someone who would benefit from my educational newsletters, please forward their name and email address to me and I will add them to our educational circle.
All Best!!
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
Showing posts with label Purchase. Show all posts
Showing posts with label Purchase. Show all posts
Wednesday, August 20, 2008
Friday, August 1, 2008
Should I buy a house or rent one?
This is an excellent question to ask yourself before taking action. Despite the economy being sluggish, and fuel prices skyrocketing, the old rules of thumb are still accurate. Here are a few questions to address before you change your address.
• Can I afford the monthly payments?
Keeping your housing payment to 35% of your monthly gross income is a conservative target. If your potential mortgage payment is significantly higher than 35% you should probably rent a little longer until you identify cheaper housing, or increase your income.
• Can I afford a down payment?
The availability of 100% (no money down) financing is all but over. As of Oct 1st, you will need a down payment to attain housing. There are still Teacher A+ programs ranging from 2% down to 5% down (not including closing costs). Of course, the more you put down, the less expensive your monthly payment will be. Nonetheless, if you have 3% to 5% of the purchase price, you can cosider yourself in a strong position to buy a home. If you are coming up short of that mark you should probably keep renting and try to save a little every month.
• What are the long term benefits?
As a home owner you will have the benefits of future equity. Here in Arizona the worst is over and the depreciation has leveled off. We should all see appreciation in property values within the next 2 years. You have the ability to redecorate and change the décor of the home. You also have nice income tax benefits by owning a home.
As a renter you will have the benefit of no maintenance responsibilty in the home. If something breaks, the landlord will come and fix or replace it. Also, you do not have to worry about having to sell the home if you move. Some owners have the ability to keep the home as a rental, but by and large, most people have to sell before the buy again - and it may not sell quickly.
• How long will I live there?
There is no disputing that the longer you wish to live somewhere that the more advantages it is to own your home. The growth in equity will definitely have large benefits over renting.
• Is my credit strong enough?
In general, mortgage lenders are going to want to see that your middle FICO score (on a trimerge report) is over 680. Ther are still programs that will work for scores under 680. But, you will have more finance options at better rates if you ave over the 680 line.
The key here is to find out what your credit score is before you want to make your move. In some cases you credit score can be fixed/improved by putting effort in to clean it over a 60–90 day period. I recommend either a free credit report from the internet – or contact a mortgage lender that will pull your credit and give you council.
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
• Can I afford the monthly payments?
Keeping your housing payment to 35% of your monthly gross income is a conservative target. If your potential mortgage payment is significantly higher than 35% you should probably rent a little longer until you identify cheaper housing, or increase your income.
• Can I afford a down payment?
The availability of 100% (no money down) financing is all but over. As of Oct 1st, you will need a down payment to attain housing. There are still Teacher A+ programs ranging from 2% down to 5% down (not including closing costs). Of course, the more you put down, the less expensive your monthly payment will be. Nonetheless, if you have 3% to 5% of the purchase price, you can cosider yourself in a strong position to buy a home. If you are coming up short of that mark you should probably keep renting and try to save a little every month.
• What are the long term benefits?
As a home owner you will have the benefits of future equity. Here in Arizona the worst is over and the depreciation has leveled off. We should all see appreciation in property values within the next 2 years. You have the ability to redecorate and change the décor of the home. You also have nice income tax benefits by owning a home.
As a renter you will have the benefit of no maintenance responsibilty in the home. If something breaks, the landlord will come and fix or replace it. Also, you do not have to worry about having to sell the home if you move. Some owners have the ability to keep the home as a rental, but by and large, most people have to sell before the buy again - and it may not sell quickly.
• How long will I live there?
There is no disputing that the longer you wish to live somewhere that the more advantages it is to own your home. The growth in equity will definitely have large benefits over renting.
• Is my credit strong enough?
In general, mortgage lenders are going to want to see that your middle FICO score (on a trimerge report) is over 680. Ther are still programs that will work for scores under 680. But, you will have more finance options at better rates if you ave over the 680 line.
The key here is to find out what your credit score is before you want to make your move. In some cases you credit score can be fixed/improved by putting effort in to clean it over a 60–90 day period. I recommend either a free credit report from the internet – or contact a mortgage lender that will pull your credit and give you council.
Jim
JIM CUNNINGHAM
Nova Home Loans
8800 E Raintree Drive #180
Scottsdale, AZ 85260
480 614-6413
602 434-8261 cell
jim@novahomeloans.com
http://activerain.com/jcunningham
Wednesday, July 23, 2008
What is a LSR?
LSR is an acronym for Loan Status Report. After an application is taken by a lender, and they perform their due diligence to approve you in good faith, you get a Loan Status Report. This document states that you have consulted with a lender and you are pre-approved to purchase a house. The letter will have a maximum dollar value on it indicating how much money you have been approved for. It will also indicate what kind of financing you are approved for and the amount of your down payment. This letter is usually submitted with a purchase contract to notify the seller that you have your money, and you are a serious buyer.
We recommend that you always request a custom LSR for each offer you submit. We are firm believers in showing that you are only approved for the amount you are willing to offer. By submitting a LSR showing that you are approved for more money then you are offering, it will sometimes influence the seller to not reduce their price during negotiation because you obviously have the money to pay more.
To acquire a LSR you are going to need to provide the lender with a significant amount of accurate information. Here is a short list of items that they will definitely ask you.
• Name
• Social Security number
• Contact Information
• Residential address for the last 2 years
• Work history for the last 2 years
• Income
• Assets
• Let them pull your credit
There are many other questions a lender can ask you to qualify you for a LSR that are specific to every borrower.
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
We recommend that you always request a custom LSR for each offer you submit. We are firm believers in showing that you are only approved for the amount you are willing to offer. By submitting a LSR showing that you are approved for more money then you are offering, it will sometimes influence the seller to not reduce their price during negotiation because you obviously have the money to pay more.
To acquire a LSR you are going to need to provide the lender with a significant amount of accurate information. Here is a short list of items that they will definitely ask you.
• Name
• Social Security number
• Contact Information
• Residential address for the last 2 years
• Work history for the last 2 years
• Income
• Assets
• Let them pull your credit
There are many other questions a lender can ask you to qualify you for a LSR that are specific to every borrower.
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
Thursday, June 12, 2008
Don't give lenders your credit card!
In any industry you are going to experience good and bad representatives within that industry. Be it an accountant, a mechanic, or a bartender - there are great ones and there are very poor ones. The lending industry is no different. I need to share a true story I heard from a perspective client an hour ago.
I got a just call from a woman named Tanya who lives in Georgia. She found my name & number on Google from an old Active Rain blog I posted in Nov 07. (Active Rain Really Works) Anyway, she wanted my opinion on her recent phone call with Quicken Loans.
Apparently, she had called Countrywide to get approved for a FHA streamline refinance (and did) and then they quoted her a rate. Then called Quicken Loans for a 2nd opinion on a rate and the representative told her this. "Countrywide is currently being purchased by B of A and your loan could be held up for 6 to 9 weeks due to the buyout. Whatever they quoted you will never close within 30 days, so the rate they are giving will surely change before you close..." "...Also, I need your credit card number to lock your rate with our company. We can prepay the appraiser, and cover your application fee with your credit card..." "...you cannot lock your loan without a credit card number..."
Holy Cow! I cannot believe that anyone would actually say that - but I guess I am wrong. Countrywide is an exceptional lender, and I am pretty sure that Quicken even sells their loans to Countrywide. I have never heard of a underwriting or funding delay at Countywide due to their impending merger. They are very solid!
***Listen closely everyone - if any lender asks you for a credit card number to lock your loan DO NOT DO IT! I don't think that they actually use your card in any way to secure a lock for your loan - but I do think it is an act to get you to commit to them and stop shopping around. I also do not believe that Quicken Loans would condone this activity if they knew about it. It is probably a desperate act by a very Jr. Loan officer (I hope).
All you need to provide to lock a potential loan is your name, contact info, your social security number, and the subject property address. All of these items should already be covered during the application process. The bottom line is to beware if someone asks you for your credit card number to lock your loan.
Arm yourself with knowledge!! (& have a great day)
Jim
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
I got a just call from a woman named Tanya who lives in Georgia. She found my name & number on Google from an old Active Rain blog I posted in Nov 07. (Active Rain Really Works) Anyway, she wanted my opinion on her recent phone call with Quicken Loans.
Apparently, she had called Countrywide to get approved for a FHA streamline refinance (and did) and then they quoted her a rate. Then called Quicken Loans for a 2nd opinion on a rate and the representative told her this. "Countrywide is currently being purchased by B of A and your loan could be held up for 6 to 9 weeks due to the buyout. Whatever they quoted you will never close within 30 days, so the rate they are giving will surely change before you close..." "...Also, I need your credit card number to lock your rate with our company. We can prepay the appraiser, and cover your application fee with your credit card..." "...you cannot lock your loan without a credit card number..."
Holy Cow! I cannot believe that anyone would actually say that - but I guess I am wrong. Countrywide is an exceptional lender, and I am pretty sure that Quicken even sells their loans to Countrywide. I have never heard of a underwriting or funding delay at Countywide due to their impending merger. They are very solid!
***Listen closely everyone - if any lender asks you for a credit card number to lock your loan DO NOT DO IT! I don't think that they actually use your card in any way to secure a lock for your loan - but I do think it is an act to get you to commit to them and stop shopping around. I also do not believe that Quicken Loans would condone this activity if they knew about it. It is probably a desperate act by a very Jr. Loan officer (I hope).
All you need to provide to lock a potential loan is your name, contact info, your social security number, and the subject property address. All of these items should already be covered during the application process. The bottom line is to beware if someone asks you for your credit card number to lock your loan.
Arm yourself with knowledge!! (& have a great day)
Jim
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
Thursday, March 27, 2008
100% Financing still available
100% Financing Still Available
If you are a buyer still looking to buy your first home (or) if you are a realtor who has a handful of First Time Homebuyers who don’t have down payments – Listen To This.
When it comes to affordable housing programs, (HUD) the US Department of Housing and Urban Development gets the majority of Arizona’s attention. Well, let me introduce you to HUD’s distant cousin RHS. If have you have never heard anyone refer to the (RHS) Rural Housing Service, you are not alone. The RHS operates under the (USDA) U.S. Department of Agriculture, and they actively promote affordable housing programs for Rural areas.
These “Rural” areas in which this program is offered may surprise you. Anthem, Buckeye, Queen Creek, Casa Grande, Whitman, Wickenburg, Tramonto, and basically 95% of the State of Arizona outside of Maricopa County all have Rural zoned houses ready for 100% financing. This program has some limitations but let me give you some highlights…
• Loan will cover up to 102% of appraised value (not just the sales price)
• No minimum credit score
• No down payment needed
• Finance all closing costs
• Full doc only
• 30 year fixed (roughly 6%)
There are obviously more details to this program but no huge curveballs. Please contact me and I can send you more details on this program. The realtors I am working with on this program are already getting more business because of it.
LETS ALL CLOSE MORE DEALS!!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
If you are a buyer still looking to buy your first home (or) if you are a realtor who has a handful of First Time Homebuyers who don’t have down payments – Listen To This.
When it comes to affordable housing programs, (HUD) the US Department of Housing and Urban Development gets the majority of Arizona’s attention. Well, let me introduce you to HUD’s distant cousin RHS. If have you have never heard anyone refer to the (RHS) Rural Housing Service, you are not alone. The RHS operates under the (USDA) U.S. Department of Agriculture, and they actively promote affordable housing programs for Rural areas.
These “Rural” areas in which this program is offered may surprise you. Anthem, Buckeye, Queen Creek, Casa Grande, Whitman, Wickenburg, Tramonto, and basically 95% of the State of Arizona outside of Maricopa County all have Rural zoned houses ready for 100% financing. This program has some limitations but let me give you some highlights…
• Loan will cover up to 102% of appraised value (not just the sales price)
• No minimum credit score
• No down payment needed
• Finance all closing costs
• Full doc only
• 30 year fixed (roughly 6%)
There are obviously more details to this program but no huge curveballs. Please contact me and I can send you more details on this program. The realtors I am working with on this program are already getting more business because of it.
LETS ALL CLOSE MORE DEALS!!
JIM CUNNINGHAM
Community First Financial, LLC
7575 E Redfield Rd Suite 235
Scottsdale, AZ 85260
480-305-8900 ext 305 - office
480-907-2435 - fax
602-434-8261 - cell
jcunningham@communityfirstfinancial.com
www.communityfirstfinancial.com
www.jimcunninghamcff.blogspot.com
http://activerain.com/jcunningham
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